What is an ICHRA (Individual Coverage HRA)?
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is an employer-funded account that reimburses employees on a pre-tax basis for premiums and medical expenses of individual ACA-compliant health insurance they buy themselves, in place of a traditional group plan (HealthCare.gov — ICHRA; IRS final rules, 2019).
Reviewed by Jason Burns, Editor & Steward · Last verified 2026-07-19
What it means
- ICHRAs let a business of any size fund individual coverage instead of sponsoring a group plan.
- Employees must have qualifying individual health insurance to receive ICHRA reimbursements.
Action steps
- Decide the monthly allowance and employee classes before adoption.
- Give employees written notice at least 90 days before the plan year starts.
Risks & deadlines
- Accepting an ICHRA that meets affordability rules generally makes the employee ineligible for Marketplace price help on the same coverage — see acadirectanswers.com for Marketplace mechanics.
Sources
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