This comprehensive glossary defines key terms related to Individual Coverage Health Reimbursement Arrangements (ICHRAs) to help employers and brokers better understand plan design, compliance requirements, and day-to-day administration.
A
Applicable Large Employer (ALE)
Under the Affordable Care Act (ACA), an employer with 50 or more full-time equivalent employees who may be subject to employer shared responsibility requirements.
Affordability (ICHRA)
A determination of whether an ICHRA offer meets ACA standards for affordability. If deemed affordable, employees are not eligible for premium tax credits.
Agent of Record (AOR)
The broker or advisor authorized to represent an employer in managing benefits and carrier relationships.
C
Classes of Employees
Categories used to group employees for ICHRA eligibility and contribution design, such as full-time, part-time, seasonal, or geographic-based groups.
Claims Administration
The process of reviewing, verifying, and approving reimbursement requests under an ICHRA.
Cost Predictability
A key advantage of ICHRAs where employers define a fixed contribution amount, helping control overall benefits spending.
D
Defined Contribution Health Plan
A benefits approach where employers set a fixed dollar amount for employees to use toward healthcare expenses, rather than covering a percentage of premiums.
Double Dipping
The prohibited practice of using multiple tax-advantaged benefits to pay for the same expense.
E
Employee Classes
See Classes of Employees – structured groupings that determine eligibility and reimbursement levels within an ICHRA.
ERISA Compliance
Federal requirements governing employer-sponsored benefit plans, including documentation, disclosures, and fiduciary responsibilities.
F
Full-Time Employee
Typically defined under the ACA as an employee working an average of at least 30 hours per week or 130 hours per month.
G
Geographic Rating Area
A location-based region used by insurers to determine premium costs. ICHRA contributions may vary based on these regions.
Group-to-ICHRA Transition
The process of moving from a traditional group health plan to an ICHRA model.
H
Health Reimbursement Arrangement (HRA)
An employer-funded benefit that reimburses employees for qualified medical expenses. ICHRA is a type of HRA.
I
Individual Coverage Health Reimbursement Arrangement (ICHRA)
An employer-funded health benefit that reimburses employees for individual health insurance premiums and eligible medical expenses.
Individual Health Insurance Coverage
Health insurance purchased by employees independently, either through the Marketplace or directly from a carrier.
L
Lowest-Cost Silver Plan (LCSP)
The benchmark plan used to determine ICHRA affordability based on an employee’s location.
M
Marketplace (Exchange)
A platform where individuals can compare and purchase ACA-compliant health insurance plans.
Medical Expense Reimbursement
The use of ICHRA funds to pay for eligible out-of-pocket healthcare expenses.
N
Notice Requirement (ICHRA)
Employers must provide employees with a written notice explaining the ICHRA at least 90 days before the start of the plan year.
O
Off-Exchange Coverage
Individual health insurance purchased outside of the public Marketplace.
Opt-Out Provision
Allows employees to decline participation in the ICHRA, typically required on an annual basis.
P
Participant Portal
An online system where employees can manage their ICHRA, submit claims, and view account activity.
Plan Document
The formal written document outlining how the ICHRA is structured, including eligibility, reimbursements, and rules.
Premium Reimbursement
Using ICHRA funds to pay for individual health insurance premiums.
Proof of Coverage
Documentation verifying that an employee is enrolled in qualifying individual health insurance.
Proration
Adjusting reimbursement amounts based on partial eligibility periods, such as mid-year hires.
Q
Qualified Health Plan (QHP)
A health insurance plan that meets ACA standards and is eligible for purchase through the Marketplace.
R
Reimbursement Allowance
The fixed amount an employer makes available to employees under an ICHRA.
Reimbursement Timing
The schedule and process for issuing reimbursements after claims are approved.
S
Safe Harbor (W-2, Rate of Pay, Federal Poverty Line)
Methods employers use to estimate affordability under ACA rules.
Special Enrollment Period (SEP)
A limited window outside of open enrollment when individuals can enroll in coverage due to qualifying events, including gaining access to an ICHRA.
Substantiation
The process of verifying that an expense is eligible before reimbursement is issued.
Summary Plan Description (SPD)
An ERISA-required document that explains plan benefits and participant rights in plain language.
T
Tax-Advantaged Benefit
A benefit that provides tax savings for employers and/or employees, such as reimbursements made through an ICHRA.
W
Waiting Period
The period an employee must wait before becoming eligible for ICHRA benefits.
Need Help?
Understanding ICHRAs can feel complex, especially when balancing compliance requirements with employee experience. Ameriflex’s benefits experts can help you design, implement, and manage an ICHRA that works for your organization.
Contact us today to learn more about our ICHRA solutions and how we support employers and brokers every step of the way.
This glossary is for informational purposes only and should not be considered legal advice. Always consult with qualified legal and benefits professionals for specific guidance.