ICHRA employee classes and why it matters
A real perk to ICHRA is the ability of employers to offer more flexible benefits to employees.
It’s not that they can bend over backwards but it can be tailored to more employees and what they’re doing.
One of the major parts that comes through are the classification groups / classes. As a way to promote equity among employees regarding health plans, ICHRA separates employees into groups based on job-based criteria. These groups/classes matter if an employer offers a traditional group health insurance plan and an ICHRA.
We note that the levels are job-based like hours worked or location. ICHRA doesn’t classify based on health needs like pre-existing conditions.
Here are the 11 classifications:
- Full-time employees
- Part-time employees
- Seasonal employees
- Employees covered by a Collective Bargaining Agreement
- Employees who have not satisfied a waiting period
- Nonresident aliens with no U.S.-based income
- Employees working in the same rating area
- Salaried employees
- Non-salaried employees (e.g. hourly)
- Temporary employees of a staffing firm
Here’s how it works
You are a larger company headquartered in California with a large workforce that’s now remote. Previously, it was difficult to offer group health to your remote workers because unless you offer a national group health plan, which can be more expensive for you, your remote workers would have to pay more due to possibly being “out of network.”
Now, you decide to offer an ICHRA. Now, your employees have the option to buy the best health plan in their respective markets. This approach saves you money because you don’t have to buy an expensive multi-state, national group health plan. The best part? Your employees can tap into the best local health providers in their community.
