An Individual Coverage Health Reimbursement Arrangement (ICHRA) allows Florida employers of any size to reimburse employees tax-free for individual health insurance premiums they purchase on their own. ICHRAs were established in 2020 and have grown in adoption among small businesses that want to offer health benefits without the complexity of sponsoring a group plan. There are no employer size requirements and no caps on reimbursement amounts.
| Rule | ICHRA Requirement |
|---|---|
| Employer size | Any size — no minimum or maximum employee count |
| Reimbursement cap | None — employer sets any monthly amount |
| Employee eligibility requirement | Employee must be enrolled in qualifying individual coverage (ACA marketplace or off-exchange) |
| ACA subsidy interaction | Employees offered affordable ICHRA lose eligibility for ACA premium tax credits |
| Employee classes | Can vary by defined class (full-time, part-time, seasonal, geographic) — cannot vary by individual |
| Notice requirement | 90-day advance notice to employees before plan year start |
| Tax treatment | Employer reimbursements are tax-deductible; excluded from employee income if employee is enrolled in qualifying coverage |
ICHRA administration platforms (PeopleKeep, Take Command Health, etc.) handle documentation, reimbursement tracking, and compliance for a monthly fee typically ranging from $15–$30/employee/month.
Not to the same employee for the same benefit. You can offer a group plan to one class of employees (e.g., full-time) and an ICHRA to another class (e.g., part-time or hourly), as long as the classes are properly defined and you provide the same offer to all employees within each class.
If the ICHRA is considered "affordable" under IRS affordability standards, employees in the class offered the ICHRA are no longer eligible for ACA premium tax credits. If the ICHRA amount is less than what makes coverage affordable, employees can opt out and retain subsidy eligibility. The affordability calculation is based on the employee's household income and the lowest-cost silver plan premium in their market.
No — there is no IRS-mandated minimum contribution. However, offering a meaningful amount is important for employee acceptance. Florida's marketplace silver plan premiums average $450–$600+/month — an ICHRA contribution of $200–$400/month provides meaningful but partial premium coverage. Employees with modest incomes who lose ACA subsidy eligibility due to an "affordable" ICHRA may push back if the reimbursement amount is insufficient.
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