How to Calculate Employee Classes by Role: 2026 ICHRA Guide

The world of health benefits is changing fast. A flexible alternative to traditional group plans, the Individual Coverage HRA (ICHRA), is seeing explosive growth. In fact, the number of people using ICHRAs is 2.8 times higher than it was just one year ago. Why the sudden popularity? It comes down to one powerful feature: employee classes.

Unlike the one size fits all approach of a single group plan, ICHRAs let you segment your workforce into different groups and offer customized health allowances to each one. The process for how to calculate employee classes by role involves analyzing your team against 11 IRS-approved job categories (like full-time vs. part-time), formally grouping them into these classes, and then setting a specific reimbursement allowance for each one. This guide will walk you through these steps, so you can design a smarter, more affordable, and compliant health benefits strategy for your unique team.

What Are ICHRA Employee Classes?

ICHRA employee classes are the 11 distinct, IRS approved categories you can use to group employees for health benefits. Think of them as predefined buckets based on legitimate job criteria. You can’t just make up your own, but the approved list gives you incredible flexibility.

The whole point is to move beyond offering the same benefit to everyone. Instead, you can create a tailored approach. For example, you can offer a higher reimbursement amount to your full time staff and a lower one to part timers. This is the foundation of how to calculate employee classes by role, using these official categories as a proxy for the different roles within your company.

The 11 official ICHRA employee classes are:

How to Calculate Employee Classes by Role: A Step by Step Guide

Ready to design your plan? Figuring out how to calculate employee classes by role is a strategic process. Here’s how you can break it down.

Step 1: Analyze Your Workforce

Before you can create classes, you need a clear picture of your team. Look at your employee census and group people by objective, job based factors:

This analysis gives you the raw data you need to build a logical class structure that reflects how your business actually operates.

Step 2: Define Your Employee Classes

Using the data from your analysis, you can now officially define your classes using the IRS approved categories. You have complete control over which classes you use. You might only need one or two, or you might need several for a more complex workforce.

Core Employment Classes

These are the most common classes employers use to differentiate benefits.

Specialized Workforce Classes

These classes address unique employment situations.

Location Based Classes

Advanced Strategy: Using Combination Classes

The rules also allow you to combine two or more of the standard classes to create a hyper specific group. For example, you could create a class for “Salaried employees in California” or “Part time seasonal employees.” This gives you almost limitless customization to fine tune your benefits strategy.

Step 3: Set Eligibility and Allowances by Class

Once you have defined your classes, you decide which ones are eligible for the ICHRA and set a monthly reimbursement allowance for each. This is where your strategy comes to life.

This is how you control costs while directing your benefits budget where it will have the most impact. For larger employers (50+ employees), also known as Applicable Large Employers (ALEs), you must also ensure the allowance you offer to full time employees is considered “affordable” under ACA rules to avoid penalties.

The Key Rules for ICHRA Employee Classes

Flexibility comes with a few important rules to ensure fairness and prevent discrimination. Understanding how to calculate employee classes by role also means understanding these compliance guardrails.

The Uniform Benefit Rule: Treating Everyone in a Class Equally

Within any single class, all employees must be offered the ICHRA on the same terms and conditions. If the “Part Time” class gets a $300 monthly allowance, every employee in that class must be offered that same $300 base allowance. You can’t play favorites.

The only permitted variations within a class are for age and family size. You can offer more to older employees (up to a maximum of 3 times the amount offered to the youngest employees) and more to those with dependents, as long as you use a consistent, uniform formula.

The “No Choice” Rule: One Benefit Type Per Class

You cannot offer employees in the same class a choice between a traditional group health plan and an ICHRA. If you’re weighing options, see our guide on ICHRA vs. group plans: key differences for employers. Each class gets one type of offer. For example, the entire “Salaried” class must be offered the ICHRA, or the entire class must be offered the group plan. They can’t pick and choose individually. This rule prevents risk pooling issues and keeps the system stable.

Minimum Class Size Requirements (When Mixing with a Group Plan)

This rule only applies if you offer a group health plan to one class and an ICHRA to another. To prevent companies from carving out small, high risk groups, certain ICHRA classes must meet a minimum size:

Important: This rule only applies to classes based on full time, part time, salaried, hourly, or geographic rating area (not state level). Classes for new hires, seasonal workers, or union members are exempt, making them great strategic options for phasing in an ICHRA. And if you offer an ICHRA to all your employees (with no group plan), this rule does not apply at all.

Legitimate Job Based Criteria: The Only Factors You Can Use

You must build your classes using only the 11 approved criteria. You cannot create a class for “managers,” “executives,” or “top performers,” as those are not on the list. The system is designed to be based on objective employment status, not titles or performance, to ensure fairness.

Putting It All Together with SimplyHRA

Figuring out how to calculate employee classes by role and managing all the associated rules can feel complex. That’s where a modern administration platform makes all the difference.

SimplyHRA is designed to make this process seamless. In just a few clicks, you can:

Ready to see how easy it can be to design a flexible, cost effective health benefit? Schedule a free demo of SimplyHRA today.

Frequently Asked Questions About How to Calculate Employee Classes by Role

No, you cannot create classes based on job titles like “executive” or “manager.” You must use one of the 11 legitimate job based criteria. However, you can often achieve a similar result by using the “salaried” employee class, as most of your executive team is likely salaried.

When an employee’s job status changes, you would simply move them to the new class in your administration platform. Their ICHRA allowance would then adjust to the amount designated for their new class, effective on a consistent, predefined date (like the first of the following month).

No, you are not required to offer an ICHRA to every class. You have the flexibility to offer an ICHRA to certain classes (like part time staff) while excluding others or keeping them on a different benefit like a traditional group plan.

There is no legal limit to the number of classes you can have. You can create as many distinct classes as you need to fit your workforce structure, as long as each one is based on the 11 legitimate criteria or a combination of them.

For Applicable Large Employers (ALEs), an ICHRA offer is considered affordable if the amount an employee must pay for the lowest cost silver plan in their area (after your allowance) is less than a certain percentage of their household income (around 9.96% for 2026). Platforms like SimplyHRA provide tools and calculators to help you determine

A Smarter Way to Offer Health Benefits

Mastering how to calculate employee classes by role unlocks the full potential of an ICHRA. It allows you to break free from rigid, expensive group plans and offer a benefit that is truly tailored to your team and your budget. By strategically defining classes and allowances, you can control costs, improve employee satisfaction, and offer competitive health coverage that makes sense for everyone.

If you’re ready to explore a more flexible benefits solution, the team at SimplyHRA is here to help you design the perfect ICHRA plan for your business.