Jack Hooper, founder and CEO of Take Command Health, based in Dallas, which helps employers and individuals compare health insurance options. TakeCommandHealth.com
Starting in 2020, instead of offering group health insurance, employers of any size will be allowed to reimburse employees with tax-free money for their own individual health insurance plus certain other health expenses.
The employers decide up to what annual amounts they will reimburse for groups of employees—full-time, part-time, salaried, etc.—under the program’s rules, which were set by the US Departments of Health and Human Services, Labor and Treasury.
Perhaps 20 million to 40 million employees could be offered these so-called Individual Coverage Health Reimbursement Arrangements (ICHRAs) within three to five years. It’s important to be aware of some potential complications…
Tax credits. An ICHRA could make you ineligible for Affordable Care Act (ACA/Obamacare) tax credits. You can’t claim the credits if your employer offers an ICHRA that is deemed “affordable” under IRS rules. If your employer’s ICHRA is deemed “unaffordable,” you have a choice—you can enroll in the ICHRA and lose tax credit eligibility…or opt out of the ICHRA and remain eligible. Those who opt out of the ICHRA can purchase individual coverage through Obamacare and potentially use tax credits to cover much of the cost. An ICHRA affordability calculator, such as the one on my website, can help you decide www.TakeCommandHealth.com/ichra-affordability-calculator.
Health Savings Accounts (HSAs). You can fund an HSA while you are participating in an ICHRA if you select a high-deductible insurance policy that is HSA-eligible and ask your employer to change the settings on your ICHRA so that it covers only insurance premiums, not any other qualified medical expenses (if these expenses usually are covered).
Unused ICHRA money. If you don’t spend all of the ICHRA money available to you, your employer might or might not let you roll the remainder over to future years—ask your employer if you’re not sure.