ICHRA Compliance: Who’s in Charge (and of what)?

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

Welcome back to our Compliance Mini-Series!

In 2020, the Departments of Labor, Health and Human Services, and Treasury – with ERISA, the CMS and the IRS, as the respective governing bodies - introduced ICHRA. On our first stop in our compliance series journey, we’ll introduce these 3 key regulatory bodies and explain what each mandates in the context of ICHRA.

<blog-icon-title>ERISA<blog-icon-title>

‍ The Employee Retirement Income Security Act of 1974 established the national minimum standards for employer-sponsored health plans. Unlike the mandates for the CMS and the IRS, (don’t worry, we’ll get there!) ERISA's mandates are agnostic of whether the plan is an ICHRA or a traditional group plan. 

In general, the main ERISA requirements are: 

• Plan Documents: a written plan document that outlines all of the health plan’s details. This document includes the classes of employees eligible for the ICHRA, the maximum dollar amount each employee can be reimbursed, the procedure for verifying health coverage, and the process of submitting reimbursement claims.
• Summary Plan Description (SPD): a document that outlines the benefits, rights, and obligations of the participants in an easy-to-understand language. For ICHRAs, the SPD should include a short, simple summary of the plan document. 
• Annual 5500 Report: an annual report that provides information about the plan’s spending and operation. With ICHRAs, the report typically includes details about insurers, funding, and other ERISA compliance requirements. 

ERISA also mandates that employers establish fiduciary responsibility and act in the best interest of the participants and beneficiaries. It also includes general communication requirements (that are reflected in the ICHRA 90 Day Notice). For now - let’s continue to the CMS! 

<blog-icon-title>CMS<blog-icon-title>

The Centers for Medicare and Medicaid Services determines which employers are required to offer benefits and what benefits should include from a medical perspective. The body governs ICHRA plan design, minimum coverage levels, affordability rules, and other areas around the plans. 

The main topics that the CMS has rules for are: 

• Employee classes and carve-outs: ICHRA allows employers to give different categories of employees different allowance amounts depending on a variety of factors. The CMS dictates what these factors are and what the guidelines are for implementing them.
• Allowances and affordability: Similarly to group plans, the CMS determines the minimum budget and affordability rules for ICHRAs. 
• Other rules and guidelines: The CMS has ICHRA adaptations to its many ACA rules, such as minimum essential coverage, reimbursements and substantiation, and others.  

<blog-icon-title>IRS<blog-icon-title>

The IRS determines the tax implications of offering benefits for employers and employees and governs the tax and financial status of ICHRA. You’ll consult these guidelines when you set up payroll deductions and substantiate reimbursement requests. 

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This is it for our introduction. Now that we know who decides on what, let’s dive deeper into each element!