ICHRA Proposal
Individual Coverage Health Reimbursement Arrangement Proposal
What to Expect?
01 What is ICHRA
02 Monthly Costs of ICHRA: Full Breakdown
03 ICHRA Planning: Important Notes
04 ICHRA Setup Checklist
05 What's Included
06 Understanding ICHRA Classes
07 The SimplyHRA Reimbursement Workflow
08 Why Companies Choose SimplyHRA
09 SimplyHRA for Employers & Employees
10 Get Started
What is ICHRA?
Short for Individual Coverage Health Reimbursement Arrangement, ICHRA provides the flexibility and cost predictability that traditional group health plans lack.
No more blanket benefits for employees with different healthcare needs and out-of-pocket budgets.
With ICHRA, employees have control over which individual health insurance to purchase. Moreover, they can use their reimbursement allowances to pay for qualified medical expenses, like annual physical exams, prescription medication, and dental visits.
And with fixed reimbursement allowances, ICHRA also protects companies from the unpredictable, year-on-year increases of insurance premiums.
With SimplyHRA, your ICHRA plan comes with the following benefits:
- Done-For-You Compliance — We handle all paperwork and compliance-related headaches.
- Easy ICHRA Administration — Build your plan, create employee classes, and manage reimbursements using our self-service platform.
- SimplyHRA Virtual Card — Automate payments with our SimplyHRA virtual card or bank account.
- Integrated Analytics — Track reimbursement amounts, plan utilization, and more.
- 24/7 AI Support — Get instant assistance using the built-in AI chatbot.
- Automated Reimbursement Management — We'll handle reimbursement tracking, approvals, and payouts.
How ICHRA Works
Step 1: Set reimbursement allowances for each employee class
Step 2: Employees set up their account and payment method
Step 3: Employees shop for individual health insurance (1st-19th of the month before plan starts)
Step 4: SimplyHRA processes enrollment after the employee pays for the premium out-of-pocket (or submits proof of coverage)
Step 5: Approved reimbursement hits the employee's bank account, while the employer collects the employee's contribution via payroll deduction
Step 6: SimplyHRA handles all compliance, tracking, and reporting
*SimplyHRA is partnered with brokerages and local insurance agents across all 50 states. We will match you with the right person to build a plan tailored to your insurance needs.
You can communicate with your agent directly or via SimplyHRA.
Monthly Costs of ICHRA: Full Breakdown
Cost of insurance premiums (10 employees)
Employer contribution: $3,780 per month - $378 per employee
Employee contributions: $1,269 - $126 per employee
Monthly total premium: $5,040 per month for 10 employees
Considerations
- 2026 Affordability Threshold — Employee monthly contributions shouldn't exceed 9.96% of their household income
- Safe Harbors — Rather than calculating each employee's actual household income, you can rely on safe harbors to calculate affordability (Federal Poverty Line, W2-Wages, and Rate of Pay)
- Benchmark Silver Plan — When calculating affordability, the Lowest Cost Silver Plan (LCSP) in the employee's rating area is used as the benchmark
- Age-Rated — Contributions increase with employee age
- Dependents — Tiered allowance models are permitted to cater to employees with dependents
SimplyHRA Monthly Cost
Platform cost: $29 per employee per month
$29 x 10 employees = $290 per month
$290 x 12 months = $3,480 per year
*Unlike other benefits platforms, we don't charge additional fees — be it for setup, compliance management, or administration.
Employee Monthly Contributions
Age BandEmployees EnrolledMonthly PremiumEmployee ContributionEmployer Contribution0-294$328.55$82.14$246.4130-394$414.04$103.51$310.5340-491$459.04$114.76$344.2850-591$950.55$237.64$712.91
ICHRA Planning: Important Notes
Monthly ICHRA costs vary based on multiple factors, including the employee's rating area, income, and your company's size.
The values mentioned above are cost estimates with the ACA affordability rule in mind. We at SimplyHRA will gladly help you tweak these values to match your workforce's healthcare needs and budget.
With SimplyHRA, employees can shop for a plan and initiate enrollment directly through the app.
Small employers with fewer than 50 Full-Time Equivalent (FTE) employees, however, have more flexibility since they're not subject to the ACA affordability rule. Just remember that, if your ICHRA plan is unaffordable, employees may choose to opt out and use premium tax credits instead.
ICHRA Setup Checklist
Finalize ICHRA Plan
Work with the SimplyHRA team to build your plan design, making sure it fits your team's needs. Let us handle the paperwork, including your ICHRA Plan Document and Summary Plan Document (SPD), as well as the final compliance check.
Sign Agreement
Sign the agreement and make the initial deposit (for pre-funded virtual card or bank account). Both can be done digitally.
Connect Bank Accounts and Integrations
Use the self-service platform to connect your bank account and payroll integrations. Assistance is provided upon request.
Employee Onboarding
Begin employee onboarding and plan enrollment. SimplyHRA provides support via consultations, digital learning resources, communication materials, and the built-in AI assistant.
ICHRA Plan Launch
ICHRA coverage starts on the 1st of the month. Use the dashboard to monitor your budget, pending reimbursements, payroll deductions, and more.
What's Included In Your Subscription
While SimplyHRA doesn't charge for account administration, we're committed to helping you reap the full benefits of ICHRA.
Automatic Payroll and HRIS System Integrations
Automate reimbursements and payroll deductions with turnkey third-party integrations. Supported platforms include ADP, BambooHR, and Gusto.
Priority Onboarding & Plan Management Support
Users can reach out anytime via email, phone, or the online booking calendar (for a private consultation). In addition, the SimplyHRA AI assistant is trained to provide 24/7 answers to any question about ICHRA.
Instant Plan Customization and Changes
With the SimplyHRA dashboard, employers or plan administrators can easily update aspects of their plan, including new employee accounts and business bank settings. Changes saved are applied in real time — no need to wait for a dedicated account manager.
Audit-Ready Reports
Have every piece of documentation ready for compliance. Reports and other essential plan documents are consolidated into the in-app document management tool.
Support for Health Savings Accounts (HSAs)
You can use SimplyHRA to launch a premium-only ICHRA plan, which can be paired with HSAs. This is preferable for younger, healthier workers who need long-term savings rather than out-of-pocket medical expenses.
Full-Service Plan Administration
Dramatically reduce the administrative load of ICHRA from several days to just a few minutes each month. We'll handle everything that keeps your ICHRA plan running in the background, including expense classification, reimbursements, and tax filings.
Employee Out-Of-Pocket Budget
Upon enrollment, employees can set an out-of-pocket limit on top of their ICHRA allowance. This allows SimplyHRA to recommend higher-priced plans with better coverage.
Understanding ICHRA Classes
ICHRA lets you set different reimbursement allowance models for different employee classes.
This adds another layer of flexibility to employee healthcare. With employee classes, you can tailor allowances based on each employee group's operational demands, needs, and budget.
The IRS currently recognizes 11 different employee classes you can use for ICHRA:
- Full-time employees
- Part-time employees
- Hourly employees
- Salaried employees
- Seasonal employees
- Employees in a specific location/rating area
- Employees covered by a Collective Bargaining Agreement (CBA)
- New hires in the waiting period
- Non-resident aliens with no US-sourced income
- Temporary employees (i.e., through a staffing firm)
- Any combination of these classifications
Aside from these IRS-approved employee types, no other employee classification can be used when setting up your ICHRA plan. Some examples of non-permitted employee classes are 1099 contractors, former employees, self-employed individuals, and risk-based groupings (i.e., smokers).
What About Owners?
Owners can only be covered by ICHRA under a C-Corp company.
On the other hand, S-Corp owners, sole proprietors, and business partners with more than 2% ownership cannot participate. These owners are considered self-employed, which is not an approved employee class for ICHRA.
The SimplyHRA Reimbursement Workflow
SimplyHRA implements a traditional reimbursement workflow. While premium payments are made automatically, employees also get paid reimbursements for qualified medical expenses.
After onboarding, the entire reimbursement workflow doesn't require the employer's direct involvement.
It starts with an employee's reimbursement request, which can be done through the app.
While waiting for reimbursements, employees are also free to explore the platform at any time. They can view their virtual card, add dependents, track their balance, or request assistance via the in-app AI assistant.
Example Scenario
- The employer sets an ICHRA reimbursement allowance of $600 for full-time employees.
- Upon enrollment, a full-time employee sets their out-of-pocket budget to $100, which updates in-app plan recommendations.
- The employee signs up for these plans ($680 total):
- $53 for dental plan
- $32 for vision plan
- $595 for individual insurance
- The employer's full reimbursement allowance is used for payment ($600).
- $80 is deducted from the employee's payroll to cover the difference.
Why Companies Choose SimplyHRA
ICHRA shines where traditional group health plans fall short.
With SimplyHRA, you can make the most out of ICHRA without all the headaches. Create a health plan that's predictable, effortless, and tailored to your company's needs.
SimplyHRA. Simply Better
✔️Better employee satisfaction with healthcare they control (and own)
✔️Attract and retain talent with customizable and affordable health benefits
✔️Protect your business from the volatility of insurance costs
✔️Intuitive interface built for streamlined management
✔️We work with every carrier on the marketplace, on-exchange and off-exchange
✔️Hassle-free compliance
✔️Works on both mobile and desktop
"SimplyHRA has been the easiest way to get setup with ICHRA for myself and my team. I used their benefits specialist to find new healthcare plans and couldn't be happier as an employer and W2 employee."
- YC Startup Founder
SimplyHRA for Employers & Employees
The Employer Dashboard
Get your ICHRA plan up and running in no time with self-service setup.
With SimplyHRA, hours of planning and administrative work can be done in minutes:
- Set reimbursement allowances
- Connect your business bank account
- Add and manage employees
- Track balances and analytics
SimplyHRA handles everything else behind the scenes — reviewing reimbursement requests, processing enrollments, automating premium payments, and making sure your plan is 100% compliant.
The Employee Dashboard
Usability and support are indispensable to employees, especially since ICHRA puts them in the driver's seat.
To create a smooth experience, SimplyHRA kicks things off with a guided onboarding process — presenting health plan recommendations based on their allowance and preferred out-of-pocket budget.
After setup, employees can use either the desktop or mobile dashboard to track their balance, upload receipts, review their plans, and learn more about their benefits via the AI assistant.
Get Started
Ready to get started with ICHRA?
Got questions?
Schedule a consultation here and let's get to work. Or, drop us a message at info@simplyhra.com.
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