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Talk to Me about ICHRA

My mission is to partner with clients to steward a sustainable and innovative benefits program to help control cost and retain talented people.

— Steven Lee, Assistant Vice President —


Individual Coverage HRA

Employees can be reimbursed for the premium cost of individual health insurance (in addition to other medical care expenses). Employees shop for, and procure, individual coverage, while receiving employer-funded, tax-free dollars to pay for some or all the cost. Contact me to learn more about ICHRA.


Now available to employers of all sizes, with no limit to the employer’s annual contribution amount. Coverage may be purchased through the individual’s State Exchange, or directly from insurers. Eligible employees must be given the opportunity to opt out of coverage at least once per year (open enrollment).


  • All participants and any dependents must be enrolled in individual insurance or Medicare in order to participate in the HRA.
  • Participation disqualifies employees from receiving any Exchange-based tax credits for coverage.
  • Employers must implement procedures to substantiate that participants and dependents are enrolled in individual coverage. Substantiation must occur upon initial annual enrollment no later than the first day of the plan year and also prior to each reimbursement made by the HRA. A model substantiation form has been provided.


  • The HRA is a group health plan subject to ERISA, COBRA, HIPAA, Medicare Secondary Payer and Non-Discrimination rules.
  • The individual coverage purchased is not considered employer group coverage and is not subject to ERISA or other group requirements.


  • Traditional group health coverage cannot be offered to any class of employees to which an ICHRA is offered. (No employee/class can be offered both or a choice of either.The HRA must be offered on the same terms to all individuals within a single class of employees. Outside of these, the permissible class distinctions are: 

    Minimum Class Size
    When an employer chooses to offer a Group Health Plan to one class of employees and an ICHRA to another class of employees, there are minimum size requirements to the number of participants in each ICHRA class. This is not applicable to waiting period class. The class size requirements are based on the total employer size on the first day of the plan year:

    • For employers with fewer than 100 employees, the class must be at least 10 employees
    • For employers with 100 to 200 employees, the class must be at least 10% of the employees
    • For employers with more than 200 employees, the class must be at least 20 employees


Any employer involvement in the individual plan selection must be unbiased and not provide preferential access to any one broker or insurer.


There is no limit to the amount employers can contribute. No variation in contributions are permitted within a class except for variations based on employee age and number of dependents. The HRA contribution for older employees cannot be three times higher than the contribution amount for younger employees.

Contributions may be made on a pre-tax basis  via the employers’ Section 125 plan but only if the coverage is purchased directly with the carrier and not through the state healthcare exchange.


(Proposed/not finalized) Offering an ICHRA can satisfy the health reform “offer of coverage” requirements that protect employers from ACA penalties, however coverage must be considered affordable to qualify for the safe harbor. Coverage is considered affordable if the employee does not have to pay more than 50% of the cost of the lowest cost Silver Plan (70% actuarial value) in their local exchange.

NOTICE REQUIREMENT (ERISA distribution methods apply)

A written notice must be provided to eligible employees:

  • Before or the date the ICHRA begins
  • For new hires, no later than the date the employee is first eligible

The notice must include information regarding:

  • The terms of the HRA
  • The employees’ right to opt out of coverage
  • A description of how the HRA interacts with the premium tax credit
  • Special enrollment periods that may be available on an Exchange

A model notice will be provided.




Assistant Vice President, AHT Insurance

Steven Lee is an Employee Benefits Consultant in the AHT Seattle office. With over 12 years in the insurance industry, he is focused on enhancing employee satisfaction, effectively assisting the HR team and creating a comprehensive and cost effective program that is ingrained into the culture of the organization. His expertise in designing and placing employee benefits programs for mid and large-sized employers groups include plan transitions, medical analytics and traditional and non-traditional benefit programs. Prior to joining AHT in 2019, Steven worked as a Senior Sales Executive for one of the nations largest insurance companies.

Steven is an active member of the Snohomish County Chapter of the Society of Human Resource Management (SHRM) and is involved with various nonprofit organization in Washington. Steven graduated from Westminster College in Missouri.


Email Steven | 206.250.1402


Built nearly 100 years ago upon the foundation of putting clients first and offering highly customized solutions, AHT maintains that client-centric focus to protect what matters most to every organization. With offices located in the DC metro area, Seattle, Chicago, New York, Boston, Forty Fort and San Francisco, we provide unmatched value, integrity and excellence to clients from the down the street to around the globe.

AHT Insurance is a full-service insurance brokerage and consulting firm offering property and casualty, employee benefits, retirement, private client and international services for clients throughout the United States and 42 other countries. Supporting numerous industries and boasting national recognition in the technology, manufacturing, government contracting and nonprofit practice areas, AHT offers clients highly customized solutions to identify and help mitigate risks they may face. As an employee owned firm, AHT’s professionals have the stability and latitude to put clients’ needs first and focus on what they do best – providing best-in-class service and solutions.

Contact Steven