Documentation & Communication Part 3 of 3: ICHRA Plan Doc and SPD

<blog-icon-title>Introduction<blog-icon-title>

Welcome back to our compliance miniseries!

In our previous post, we shared how to set up a benefits program using a Section 125 Cafeteria Plan. In this piece, we’ll discuss ICHRA specifically. 

To set up an ICHRA plan, an employer is required to create a formal ICHRA Plan Document. A “Plan Doc” is a long document that details all of the rules governing what the ICHRA is offering to employees. In simple terms, think of the plan doc as an extremely thorough FAQ answering any possible question about the ICHRA (what, when, how, who, how much, etc). 

In addition to the extensive Plan Doc, employers also need to create a Summary Plan Description (SPD). This is a shorter, employee-friendly version of the Plan Document that explains key details in easy language. 

Let’s go ahead and dive into both. 

<blog-icon-title>The Plan Document<blog-icon-title>

The ICHRA Plan Document must include the following information: 

Plan details: 

• Name and timelines (the start date of the ICHRA including the plan year, which can be the calendar year or any 12-month period)

Employee details: 

• Which employees are eligible for the ICHRA 
• When and how reimbursements will end (such as upon an employee's termination or resignation)

Process details:

• How employees make plan selections and what the opt-out provisions are 
• Information about any notifications the employer must provide to employees, such as details about the ICHRA and how it works
• Information about who will administer the ICHRA (the employer or a third party)

Payment details:

• What the reimbursement rules are including the maximum reimbursement amount, which medical expenses are eligible for reimbursement, and the payment process for these expenses
• Substantiation and what employees need to provide as proof of coverage  that they have individual health insurance

Other details:

• How the plan ensure it does not discriminate in favor of highly compensated employees
• Procedures for how the plan can be amended or terminated
• How the ICHRA plan will comply with HIPAA's privacy and security rules if it is considered a covered entity under the Health Insurance Portability and Accountability Act (HIPAA) 
• Clarification on how the ICHRA interacts with other employer-provided benefit
• Information about record-keeping practices and how long records must be retained.

<blog-icon-title>The Summary Plan Description<blog-icon-title>

The SPD is a simplified version of the Plan Document meant to be written in simple, straightforward language. There are no specific requirements around what fields and details must be included. In general, the SDP needs to summarize the key parameters of the plan and employees’ rights and responsibilities to qualify for it. The SPD must be provided to employees upon request and there are penalties for failing to do so. 

<blog-icon-title>Conclusion<blog-icon-title>

Documentation is key to successful ICHRA implementation – not just because it’s required but because it also guarantees employees are well-informed and prepared to interact with their new benefit. Writing these documents is complex, and that’s why we’ve automated the whole process and allow modular creation of the ICHRA Plan Document on our Zorro platform. 

Have a question? Reach out! 

NEXT STOP! Reporting!