ICHRA Employee Classes – Design Your Benefits with Precision
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Understanding ICHRA Employee Classes
One of the most powerful features of an Individual Coverage Health Reimbursement Arrangement (ICHRA) is the ability to tailor benefits by employee class.This flexibility allows employers to create different contribution levels for different groups of employees while remaining ACA-compliant.Our ICHRA third-party administrator service at Pandora Insurance ensures ACA-compliant health benefits design for all employee classes.Our solution offers broker-friendly ICHRA options for employers and brokers.
ICHRA Employee Class Definitions
Typically working 30+ hours per week. May receive higher allowances.
Working fewer than 30 hours per week. Allows proportional benefits.
Employed seasonally in industries like hospitality or retail.
New hires awaiting eligibility can be included later.
Allows tailored benefits for younger employees.
by a Collective Bargaining Agreement – Can have separate allowances or be excluded.
Useful for multi-state employers to adjust contributions by region.
with No U.S.-Based Income – May be excluded from coverage.
Compliance Rules
– Classes must be clearly defined in plan documents.
– An employee class cannot receive both group coverage and ICHRA (with limited exceptions).
– Minimum class size rules apply if offering both ICHRA and group coverage:
– Fewer than 100 employees: at least 10 employees per class.
– 100–200 employees: at least 10% of employees per class.
– More than 200 employees: at least 20 employees per class.
Why Classes Matter
– Budget Control: Direct higher allowances to key employee groups.
– Recruitment & Retention: Customize benefits to attract and retain talent.
– Multi-State Flexibility: Adjust for regional insurance costs.
Official References
Health Reimbursement Arrangements (HRAs): https://www.irs.gov/pub/irs-drop/td-9877.pdf
FAQs on HRAs and ACA Compliance: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-42.pdf