Benefits Buzz
ICHRA Special Enrollment Periods
If you’re familiar with the individual health insurance market, you should be aware that the Affordable Care Act (ACA) made significant changes to the application and enrollment processes starting in 2014.
Gone are the days of medical underwriting. No one can be refused coverage or charged a higher premium because of past or present medical conditions. This comes as welcomed news for those seeking health insurance coverage on their own; however, the ACA also limits when a person can apply for individual health insurance coverage.
Each year, there is an open enrollment period that typically runs from November 1st through December 15th. Anyone can enroll in an individual health insurance plan during this time. Outside of this time, special enrollment periods are only available to people who experience certain events, such as getting married or having a baby.
Enter – Individual Coverage Health Reimbursement Arrangements (ICHRAs), a new way that employers can provide health insurance coverage to employees. Rather than providing a traditional group health plan to employees, an employer may choose to reimburse employees for health insurance they obtain on their own in the individual market.
The reimbursements are tax-free to employees, and employers get to choose how much to reimburse employees. An option is also available to reimburse out-of-pocket expenses like deductibles and copays. The employer gets to write-off the reimbursements as a business expense.
The establishment of an ICHRA also creates a special enrollment period in the individual health insurance market. Employees can enroll in an individual health insurance plan 60 days before and 60 days after the effective date of the ICHRA. This special enrollment period will also be available each year to coincide with the renewal date of the ICHRA.
This means employers don’t have to line up the effective date of their ICHRA with the open enrollment period in the individual health insurance market. ICHRAs can be established at any time during the year, and employees who are eligible for the ICHRA will have the ability to select an individual health insurance plan of their choosing.
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