Your team is the heart of your practice, turning your vision into reality. Supporting them isn’t just a checkbox—it’s key to keeping them motivated and engaged.
Considering an ICHRA for dental practices can help. It’s an alternative to group health insurance that gives your employees financial protection for health needs. Let’s see how it fits your dental practice.
What is an ICHRA Plan?
An ICHRA (Individual Coverage Health Reimbursement Arrangement) allows employers to reimburse employees for medical expenses and individual health insurance costs. It’s a flexible alternative to traditional group health insurance, offering more options for both employers and employees.
Keep in mind that you can’t offer both ICHRA and group health insurance to the same employee—they must choose one or the other. However, you can offer both plans within your business as long as each employee is only enrolled in one. If you go with ICHRA, make sure all participating employees have qualified individual health insurance.
Creating an ICHRA Plan
An ICHRA plan can help you keep everything well-organized and straightforward. It sets clear guidelines so your employees understand the plan’s limits and can choose an individual insurance plan that makes the most of your reimbursement offer. Here are the steps to create your practice’s ICHRA plan.
Determine employee eligibility
An ICHRA plan requires defining different employee classes, as listed below:
- Full-time employees
- Part-time employees
- Seasonal employees
- Employees covered under a collective bargaining agreement
- Employees in a waiting period
- Foreign employees who work abroad
- Employees working in the same geographic location (same insurance rating area, state, or multi-state region)
- Salaried workers
- Non-salaried workers (such as hourly workers)
- Temporary employees of staffing firms
- A combination of two or more of the above
Each class can have distinct reimbursement rates or qualifications based on family or age. The rule is that employees in the same class should receive the same HRA allowances.
The ICHRA has minimum requirements per class, as explained below.
- If your company has fewer than 100 employees, you need at least ten employees in each class.
- If your company has between 100 and 200 employees, each class must include at least 10% of the total workforce. For example, with 150 employees, you’d need at least 15 in that class.
- If your company has more than 200 employees, each class must have a minimum of 20 employees.
Determine the open enrollment date.
Before the current year ends, you must commence enrollment to prepare employees for a new health coverage plan next year. Open enrollment differs per state, but it usually starts on November 1 and ends on January 15. As a dental practice owner, you have to remind your employees about the open enrollment dates and perhaps sit down with them to discuss their needs.
If you’re offering ICHRA, you have to remind your employees to go to insurance marketplaces and look for a health coverage plan that they want. Some employees may opt out as well due to being covered by their spouse’s or parent’s plan.
Set eligible expenses
Decide which fees will be covered under your ICHRA plan, which must include the qualified individual health insurance premium of your employees. On top of that, you may also want to include out-of-pocket medical costs not covered by employees’ health insurance to offer broader financial support. Examples of HRA-eligible expenses are the following:
- Doctor visits
- Prescribed medication
- Over-the-counter medication
- Mental health consultations
- Birth control
Set your allowance amounts
There’s no standard reimbursement amount for an ICHRA—it depends on your specific needs and goals. Consider these factors when setting allowances:
- Your overall budget for the ICHRA plan.
- The planned reimbursement amounts for each employee class.
- The average cost of individual health insurance among your employees.
- The number of employees in each class.
- The number of employees with dependents.
- Employee age, since older employees might receive higher reimbursements than younger ones.
Create your formal planning document.
The IRS and Department of Labor require you to establish a formal document for your ICHRA. This document should detail all aspects of the plan and serve as the go-to resource whenever questions arise about the ICHRA benefits.
The ICHRA planning document is required under the Employee Retirement Income Security Act or ERISA. This document must contain the following information:
- Administrators and fiduciaries of the plan
- Classes of eligible employees
- Reimbursement amounts and limits
- Start and end dates of the ICHRA
- Description of plan benefits
- Funding of the ICHRA
- Procedure for claims and substantiation requirements
- Amendment and termination procedures
Aside from that, you also need to secure a summary planning description (SPD). If you have a planning document without SPD, the Department of Labor may fine you up to $110 per day if you can’t produce an SPD within 30 days of an individual request.
The SPD must include the following:
- Detailed description of plan benefits
- Employee participation requirements
- Calculation of services and benefits
- Contribution details
- Vesting schedule
- Payout conditions and forms
- Claims filing procedures
- Benefit features
- Participant rights
Discuss the ICHRA with stakeholders
Make sure all potential participants are fully informed about the requirements and benefits of the ICHRA. Hold an all-hands meeting to present the plan, answer questions, and gather employee feedback to ensure transparency and understanding.
Let’s Build Your Practice’s ICHRA Plan
We won’t sugarcoat it—creating an ICHRA plan can feel challenging, especially if you’re new to it. But that’s where we come in. We’re here to guide you every step of the way as you work toward providing solid health coverage for your team.
At Core Advisors, we specialize in helping dental practices design ICHRA plans that keep employees secure, motivated, and fully invested in the success of your business.
Let’s connect and explore how we can build the right ICHRA plan for your practice.
