How To Get an ICHRA Exchange Special Enrollment Period (SEP) Midyear

The Individual Coverage Health Reimbursement Arrangement or ICHRA Exchange Special Enrollment Period option (for 60 days) is allowed when an employer elects to start an ICHRA.

Did you miss the last Exchange open enrollment period? Starting an ICHRA is an easy way to get another Special Enrollment Period midyear.

The ICHRA is a relatively new type of employer-provided health benefit that allows employers to reimburse employees for premiums on individual health insurance plans purchased through the Health Insurance Marketplace (also known as the Exchange), or directly from an insurer. Here’s how the Special Enrollment Period feature works within the context of ICHRA:

Key Points about ICHRA:

1. What is ICHRA?
   • It stands for Individual Coverage Health Reimbursement Arrangement.
   • It allows employers to reimburse employees for premiums on individual health plans, instead of providing a traditional group health insurance plan.
   • This can be an attractive option for employers who want to offer health benefits but don’t want to deal with the complexities of group health plans.
2. Special Open Enrollment:
   • Normally, to purchase a health insurance plan through the Health Insurance Marketplace, you need to enroll during the Open Enrollment Period (usually fall) or if you experience a Qualifying Life Event (QLE), such as marriage, birth of a child, etc.
   • However, with an ICHRA, employees may qualify for a Special Open Enrollment Period (Special Enrollment) through the Marketplace. This is a unique benefit tied to the employer offering the ICHRA.
   • This Special Enrollment Period typically applies when an employee is offered an ICHRA for the first time or experiences a change in the reimbursement amount. It allows them to enroll in a Marketplace plan outside the usual open enrollment window.
3. Who can use this option?
   • If you’re an employee whose employer offers an ICHRA, and you weren’t already enrolled in a Marketplace plan, you could use this Special Enrollment to shop for individual health insurance through the Marketplace.
   • The same applies if the employer changes or increases the reimbursement amount for the ICHRA, triggering a Special Enrollment Period.
4. Timing:
   • This Exchange Special Enrollment Period usually lasts for 60 days after the date the ICHRA is first offered, or after a change to the reimbursement arrangement occurs.
   • You must apply for coverage through the Health Insurance Marketplace within this 60-day window to take advantage of the Special Enrollment Period.
5. Reimbursement:
   • Employers typically set a fixed amount for reimbursements (like $300 a month, for example). The employee then uses this amount to pay for their individual health insurance premium.
   • These reimbursements are tax-free, which can be a financial advantage for both the employee and employer.
6. What happens after the Special Enrollment Period?
   • If you enroll in a Marketplace plan during the ICHRA Exchange Special Enrollment Period, your coverage starts as usual (based on the Marketplace rules).
   • You will then submit your individual health insurance premiums to your employer, and they’ll reimburse you according to the ICHRA guidelines.
7. Benefits of ICHRA & Special Enrollment:
   • Flexibility: Employees can choose the plan that works best for them (family plans, individual coverage, etc.).
   • Potential Savings: Employees could save on health insurance premiums because of the tax-free reimbursements.
   • No Group Health Plan Required: Employers don’t need to offer a traditional group health insurance plan, which can be costly and administratively complex.

Example Scenario:

Let’s say you work for a company that offers an ICHRA. They provide you with a $400 monthly allowance to purchase an individual health plan. When your employer offers you this arrangement, you get a Special Enrollment Period in the Health Insurance Marketplace, meaning you can sign up for a health plan outside the usual open enrollment window.

Once you enroll in a plan, you pay the premium and submit proof to your employer. The employer then reimburses you up to $400 per month, tax-free, to cover the cost of your insurance premium.

In summary, the ICHRA Special Open Enrollment option allows employees who are offered an ICHRA for the first time or who experience a change in reimbursement to access a special period to enroll in an individual health plan through the Marketplace. It helps employees gain access to flexible and often more affordable healthcare options while allowing employers to support their employees’ health coverage in a cost-effective way.

Let me know if you’d like more details about how the Marketplace works with ICHRA or any other specifics!

Source articles:

https://www.healthcare.gov/job-based-help/ichra/