Family-owned since 1982, based in Santee. CBIS sets up group health, dental, vision, life, disability and Section 125 plans for San Diego employers, from the owner plus 1 employee to groups of about 250, with a named CBIS contact for each account.
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What an ICHRA is
An ICHRA is a type of health reimbursement arrangement. The employer sets a monthly allowance, and each employee buys an individual health plan. When an employee shows proof of a premium, the employer reimburses it, up to the allowance.
Employees choose their plan in the individual market, through Covered California or outside it, so each person can pick the network and deductible that fit them. If a plan costs more than the allowance, the employee pays the difference.
Reimbursements for qualifying individual coverage are generally not taxed as income to employees. Tax treatment depends on how the plan is set up and on your business, so check with your tax advisor or CPA.
How the allowance works
- You choose the amount. There’s no federal minimum or maximum allowance.
- Allowances can differ by employee class. Within a class, amounts can vary only in set ways, such as by age or family size.
- Employees need individual coverage. To be reimbursed, an employee has to be enrolled in an individual health plan or Medicare for those months.
- Employees get a notice. Employers generally give eligible employees a written notice at least 90 days before the plan year starts. New hires get it by the day they become eligible.
Who an ICHRA may fit
An ICHRA can be worth a look for San Diego employers who:
- Want a set monthly budget for health benefits
- Have employees who’d like to pick their own plan and network
- Have trouble meeting a group plan’s participation rules
- Have a mix of full-time, part-time and seasonal employees
It isn’t the right fit for every group. Individual plan networks and costs differ from group plans, and an ICHRA offer can affect whether employees qualify for premium help through Covered California. Employers with 50 or more full-time employees also have ACA affordability rules. We lay out an ICHRA next to group plan options so you can compare.
How CBIS helps
- Setup. We help you choose employee classes and allowance amounts and get the plan set up before your start date.
- Plan comparison for employees. CBIS is contracted with Covered California, and we help employees compare individual plans and networks.
- Renewals. Each year, we review the allowance, the plans employees picked, and how an ICHRA compares with a group plan for your team.
- A named person to call. Each account has a named CBIS contact.
Still deciding? See how we compare options for small business health insurance in San Diego, or see our group benefits for San Diego employers.
ICHRA questions
Can a small business offer an ICHRA?
Yes. An ICHRA is open to employers of any size, including businesses with only a few employees.
Are ICHRA reimbursements taxable?
Reimbursements for qualifying individual health coverage are generally not taxable income for employees. The rules depend on how the plan is set up, so check with your tax advisor or CPA.
Can I offer an ICHRA and a group plan at the same time?
Yes, to different classes of employees, such as full-time and part-time. Employees in the same class can’t be offered both.
How is an ICHRA different from a group health plan?
With a group plan, the employer picks the carrier and plans, and employees choose from that set. With an ICHRA, the employer sets an allowance, and each employee picks an individual plan.
How much does an ICHRA cost an employer?
You decide the cost by setting the monthly allowance, and you only reimburse premiums employees actually pay, up to that amount. There may also be a cost to administer the plan. CBIS can lay out what different allowance amounts would look like for your team.
What’s the difference between an ICHRA and a QSEHRA?
A QSEHRA is only for employers with fewer than 50 full-time employees, has yearly IRS limits, and can’t be offered alongside a group plan. An ICHRA works for any size employer, has no allowance limit, and lets you set different amounts for different employee classes.
Can employees use their ICHRA for Covered California plans?
Yes. Employees can buy a plan through Covered California or outside it. Whether they can also get premium help depends on whether the ICHRA offer is affordable under ACA rules, so check with Covered California or a tax advisor.
Can an ICHRA cover family members?
Yes. You can offer larger allowances for employees with family coverage. Each family member who’s covered has to be enrolled in individual health insurance.
When can an ICHRA start?
An ICHRA can start on the 1st of any month, not just January. When employees are first offered one, they generally get a special enrollment period to buy individual coverage.
Do employees have to take the ICHRA?
No. Employees can opt out each year, for example to stay on a spouse’s plan.
What if an employee’s plan costs more than the allowance?
The employee pays the difference. How that payment is treated for taxes depends on the plan and the employee’s situation, so check with a tax advisor.
Can I offer an ICHRA to only some employees?
Yes, by employee class, such as full-time, part-time, seasonal, or salaried and hourly. Everyone in a class gets the same offer, though amounts can go up with age or family size.
Does an ICHRA meet the ACA rules for employers with 50 or more full-time employees?
It can, if the allowance is high enough to count as affordable under ACA rules. CBIS can walk you through how that’s figured.
Talk with CBIS about an ICHRA
Call or text CBIS at (858) 283-7575, book a free call (opens in new tab), or Get a benefits quote.
CBIS is an insurance agency, not a tax advisor or law firm. This page is general information, not tax or legal advice. Please talk with your CPA, tax advisor, or benefits attorney about your specific situation.