Health Reimbursement Accounts and ICHRA

Northwest Group Services administers flexible Health Reimbursement Accounts (HRA), including Individual Coverage Health Reimbursement Arrangements (ICHRA). Both approaches let employers provide defined reimbursement benefits while supporting predictable budgets and employee choice. Plan terms, eligibility, substantiation, and tax treatment depend on the plan document.

Traditional Health Reimbursement Accounts (HRA)

Many employers pair a high-deductible health plan with a traditional HRA to help manage health insurance costs. The employer funds each eligible employee's reimbursement account and determines how it may be used. Depending on plan design, an HRA may reimburse deductibles, co-pays, coinsurance, and other qualified medical expenses. NWGS can support documentation, reimbursement workflows, and ongoing plan administration.

An HRA is employer-funded. Unlike an FSA, generally funded through employee salary reductions, and an HSA, an employee-owned account paired with an HSA-eligible plan, an HRA reimburses expenses under the employer's plan rules.

ICHRA (Individual Coverage Health Reimbursement Arrangement)

An Individual Coverage Health Reimbursement Arrangement (ICHRA) lets an employer provide a defined allowance for individual health insurance coverage and, depending on plan design, other qualified medical expenses. Employees choose qualifying individual coverage, submit required documentation, and receive approved reimbursements up to the available allowance.

ICHRA can be a flexible alternative or complement to a traditional group health plan. Employers may define eligible employee classes and set predictable allowance amounts while employees select individual coverage. NWGS can assist with plan setup, enrollment support, reimbursement processing, compliance-oriented workflows, and ongoing administration.

How does an ICHRA generally work?

1. The employer designs the ICHRA, including employee classes and allowance amounts.

2. Eligible employees enroll in qualifying individual health coverage.

3. Employees submit qualifying premiums or expenses under the plan rules.

4. The employer or TPA reimburses approved amounts up to the allowance.

Learn more about HRA and ICHRA administration by contacting NWGS or scheduling a free analysis.

Frequently Asked Questions

What is an HRA?

An HRA is an employer-funded arrangement that reimburses eligible employees for qualified medical expenses under the plan's rules.

How does a traditional HRA work?

The employer establishes the plan and funding amount. Eligible employees submit substantiated expenses, and the plan reimburses approved amounts up to available balances.

What is an ICHRA?

An ICHRA is a defined-contribution health benefit that reimburses eligible employees for individual health coverage and other eligible expenses according to plan rules.

Who can offer or use an ICHRA?

Employers of any size may consider an ICHRA, subject to applicable rules. Employees in eligible classes can use it when they have qualifying individual coverage.

How is an ICHRA different from a traditional group HRA?

An ICHRA is tied to individual health coverage selected by the employee, while a traditional group HRA generally works alongside an employer-sponsored group health plan. Design and eligibility rules vary.

What expenses can an HRA typically reimburse?

Depending on plan design, an HRA may reimburse eligible medical expenses such as deductibles, co-pays, coinsurance, and other qualified costs. The plan document controls what is covered.

How is an HRA different from an FSA or HSA?

An HRA is funded by the employer and reimburses expenses under its plan rules. An FSA is generally funded through employee salary reductions, while an HSA is an employee-owned account paired with an HSA-eligible high-deductible health plan. Eligibility and tax rules differ.

What coverage must employees have for an ICHRA?

Employees generally must be enrolled in individual health insurance coverage that meets applicable requirements. The plan administrator can explain documentation and substantiation steps.

Can NWGS administer HRA and ICHRA plans?

Yes. NWGS can support plan setup, enrollment workflows, reimbursement administration, documentation processes, and ongoing service. Contact NWGS or schedule a free analysis to discuss your needs.

General information only; this is not tax or legal advice. Consult qualified advisors about your specific plan and circumstances.

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