ICHRA Compliance Series: Navigating the Regulatory Maze

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Table of Contents


Welcome, business owners, benefits enthusiasts, and brokers! 

At Zorro, we believe that personalization can improve the cost and quality of health benefits to all stakeholders and we’re excited to build technology to enable this through ICHRA. We also recognize that ICHRA, and any change in benefits, involves daunting compliance nitty-gritty. 

Together over the next few weeks, we are going to embark on an adventure in this blog series to share our expert wisdom around the otherwise tedious world of ICHRA compliance. Most importantly, we’ll be here for any question or request you have along the way… 

Here are the stops on our journey. Buckle up and let’s get going! 

<blog-icon-title>Who's in Charge?<blog-icon-title>

Our first stop is an introduction to the three major regulatory bodies overseeing compliance. In this section, we’ll introduce you to the triad:

  1. ERISA (Employee Retirement Income Security Act): this law, which governs who is entitled to receive benefits and how to communicate them, ensures that your ICHRA meets certain benefit program standards. 
  2. CMS (Centers for Medicare & Medicaid Services): CMS administers all ACA-related regulations and ensures that your ICHRA plan design is affordable and non-discriminatory. 
  3. IRS (Internal Revenue Service): Ah, the tax overlords! The IRS keeps a watchful eye on the financial aspects of your ICHRA to make sure they align with the tax code. 

<blog-icon-title>ICHRA Plan Design: Unleashing the Creativity!<blog-icon-title>

After we get to know our regulators, we’ll explore ICHRA plan design. Here's where you get to exercise your creative muscle:

  1. Classes and Carve Outs: ICHRA classes allow you to categorize employees based on various work characteristics and tailor benefits to each group's unique needs. You can also carve out certain employee classes from the ICHRA plan and keep them on a group plan.
  2. Allowances and Affordability: Affordability in the context of ICHRA has lots of moving pieces – all geared toward making sure that employees can purchase quality coverage.  
  3. Other plan features: you can decide whether to allow employees to use extra funds for medical expenses and control other parameters of the plan as you set up an ICHRA.

<blog-icon-title>Documentation and Communication: The Art of Clarity<blog-icon-title>

Clear communication is the backbone of any successful ICHRA journey. In this stop, we’ll master the art of documenting and conveying your stellar new benefits:

  1. 90-Day Notice: an important, mandatory communications that provides your employees a 90-day heads-up before starting the ICHRA journey. 
  2. Section 125: A "cafeteria plan" that establishes what benefits you offer and their tax status.
  3. ICHRA Plan Document & SPD: A detailed legal description of the plan you set up that governs everything about its administration.

<blog-icon-title>Reporting: Navigating the Tax Obligations<blog-icon-title>

No journey is complete without reporting back to the regulators. We’ll ensure you have a smooth landing:

  1. ACA (1095 + 1094): IRS forms around each employee’s health plan and funding. 
  2. Form 5500: An ERISA census for your ICHRA plan.
  3. Form 720 (PCORI): A CMS and associated fee. 



Phew! That was quite an introduction to the world of ICHRA compliance and we're just getting started. At Zorro, we're your ICHRA heroes and experienced experts. We'll be your trusted companion automating the process and helping you and your employees navigate the intricacies of ICHRA compliance and empower you with all the knowledge and confidence you need to choose ICHRA as your next benefits solution. 

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