This is the 3rd post in a series on ICHRAs and SEPs. Links to others can be found below.
Over the past few weeks, we have posted a few items on Individual Coverage HRAs (also known as ICHRAs) and Special Enrollment Periods (SEPs). We recently got asked about how this would work with different types of employees, such as seasonal or part-time.
Employers are allowed to offer ICHRAs with different terms to different groups. They are even allowed to extend an ICHRA to some employees while others are offered ‘traditional’ group health plans. Which is ideal for seasonal or part-time employees! There are 11 predetermined classes.
ICHRAs and Employee Classes
ICHRAs are flexible, particularly when designing a program to fit the needs of employers and employees. By law, an ICHRA can be offered to everyone in a company or just to specific groups (also called classes) of employees. The class types are:
- Full-time employees
- Part-time employees
- Seasonal employees
- Salaried employees
- Non-salaried employees (such as hourly) contract employees cannot be offered an ICHRA.
- Employees covered by a particular collective bargaining arrangement (different bargaining units can be separate classes)
- Employees who have not satisfied a waiting period
- Temporary employees of staffing firms
- Non-resident aliens with no U.S.-based income
- Employees working in the same insurance rating area* (i.e., the same geographic location such as state or multi-state region)
- Any combination of two or more of the above
Employers are able to use these classes in different ways. They can opt to offer an ICHRA to:
- All employees
- Only to certain classes and not offer a benefit to others
- Only to certain classes and offer a traditional group benefit to different classes
- Offer different classes different contribution amounts
Note that the government sets these class types. Employers are not allowed to make their own classes of employees.
Restrictions on Group Size
There are restrictions. For instance, if an employer offers traditional group plans to one group and an ICHRA to another, there are size requirements for the group offered the ICHRA. The size requirements for the group depend on the size of the company:
|Size of employer
|Class size minimum
|Fewer than 100 employees
|10% of the total number of employees
You can find more information on classes in this document put together by the Department of the Treasury, the Department of Labor, and the Department of Health & Human Services.
Also, note that an employer cannot offer an ICHRA and a traditional group plan to the same group of employees.
Let’s look at an example of how ICHRA classes can work with SEPs. A company with 20 full-time employees has a traditional health plan in place for those 20 employees and historically has not offered benefits to its seasonal employees. This year they are looking to hire 10 seasonal employees and want to offer benefits to attract a more qualified pool of applicants.
The company can offer an ICHRA to the seasonal employees since they meet the minimum number of employees (reference above table) in that group. And since the company is offering an ICHRA, it will open a special enrollment period (SEP) allowing those 10 seasonal employees to enroll in an ICHRA plan without impacting the plans of its 20 full-time employees.
Find more information on ICHRAs here: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/Health-Reimbursement-Arrangements