Thorny Laws That ICHRA Vendors Should Consider

Individual Coverage Health Reimbursement Arrangements (ICHRAs) have continued to grow in popularity since their inception in 2019 (see our article here summarizing the 2019 rule establishing ICHRAs). While initially it seemed that ICHRAs were more attractive for small employers looking for a cheaper alternative to the small group insurance market, mid-sized and large employers have increasingly begun exploring these arrangements (see data here from the HRA Council). With employers of all sizes adopting ICHRAs, both established service providers and start-ups are offering ICHRA administration and related services.

While the simplicity of ICHRAs can make them a great fit for many employers, ICHRA vendors face a complex and often unclear regulatory environment, especially given that most of the traditional group health plan laws do not perfectly apply to the ICHRA structure. For some of these laws, the legal obligation to comply might technically fall on the employer