January 25, 2021

Pay or play IHCRAs


Since 2020, employers have been able to offer individual coverage HRAs (ICHRAs) to help employees pay for individual health insurance. ICHRAs were established by a final rule published on June 20, 2019, which raised questions about how existing federal rules will apply to ICHRAs.

On Jan. 13, 2021, the IRS issued a final rule to clarify the application of the following federal requirements to ICHRAs:

  • The Section 4980H employer shared responsibility (pay or play) rules under the Affordable Care Act (ACA); and
  • The federal non discrimination requirements in Internal Revenue Code (Code) Section 105(h).

The final rule affects employers, employees and their family members, plan sponsors, and health insurance issuers that offer individual health insurance coverage. This Compliance Bulleting provides an overview of the provisions in the final rule.

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