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ICHRA substantiation of coverage (Individual Coverage HRA)
Employees (and their dependents) must provide ICHRA substantiation of coverage before the employer can make a reimbursement. This substantiation of coverage is required at the beginning of every plan year and with every request for reimbursement.
Substantiation of Coverage
Under the final rules, employers offering an Individual Coverage HRA must enact reasonable procedures to ensure that participants (employees and dependents) expecting to receive reimbursements are enrolled in individual health coverage. This is required before the start of each plan year, with every request for a reimbursement, and upon eligibility for newly hired employees.
(Employers with the Core IC-HRA plan document package receive all necessary forms customized with dates and contact information.)
Annually
Prior to the first day of each plan year, every participant in an ICHRA must complete and submit the Individual Coverage HRA Attestation: Annual Coverage Substantiation Requirement form.
The model form provided by the IRS contains the following language:
“If you plan to enroll in the individual coverage HRA, you must complete this form to confirm that
you will have individual health insurance coverage, Medicare Part A and B, or Medicare Part C
while you are covered by the HRA. If your family members will also be covered by the individual
coverage HRA, you need to fill out the applicable section of this form on their behalf.”
The model form has an area for the employee and for one dependent. Employees with additional dependents may attach additional pages.
The employer inserts contact information and the date by which the form must be returned.
Note: An employer may set an earlier date or return of the forms but it must be no later than the first day of the plan year.
Ongoing
When an employee submits a request for reimbursement through an employer’s Inndividual Coverage HRA, a completed Individual Coverage HRA Attestation: Ongoing Substantiation Requirement must accompany the request or claim form.
The model form provided by the IRS informs the employee:
“To receive reimbursement for medical care expenses under your individual coverage health reimbursement arrangement (HRA), you must complete this form for each request for reimbursement.
The individual coverage HRA will reimburse you for a medical care expense incurred during a month only if you have (or had) individual health insurance coverage, Medicare Part A (Hospital Insurance) and B (Medical Insurance), or Medicare Part C (Medicare Advantage) during that month. Similarly, the individual coverage HRA will reimburse you for a medical care expense your family member incurred during a month only if the family member has (or had) individual health insurance coverage, Medicare Part A and B, or Medicare Part C during that month. In this form, you are attesting that you (or your family member) meet this requirement.”
The model form has an area for the employee’s and a dependent’s information for the expense.
The employer may design a form that combines the attestation with the expense claim form; otherwise, the ongoing substantiation form must include a statement that the reimbursement form is separate.
Newly eligible employees and dependents
When an employee or dependent becomes newly eligible to participate in the ICHRA in the middle of the plan year, the annual substantiation form must be completed and returned to the employer before HRA coverage takes effect.
This includes those becoming eligible after the 90-day notice has been distributed to other employees but before the plan year begins.
The employer may set a date that is reasonable considering the time necessary for the employee or dependent to enroll in individual health coverage but no later than the date their HRA coverage begins.
Substantiation methods
Two methods are acceptable to meet the annual substantiation requirement:
Third-party
The employee may provide the employer with proof of coverage from a third party (such as the policy issuer or the exchange) by presenting an insurance card, explanation of benefits (EOB), or other document stating the employee (and any dependents) will have individual health coverage for the plan year (or relevant month).
Attestation
The employee-participant may, alternatively, provide the HRA with an attestation that the employee (and any dependents) will be enrolled in individual health coverage for the plan year (or relevant month), including the date coverage begins and the name of the coverage provider. Note: The ongoing substantiation form contains language that could be used for this attestation.
Reliance on attestation or documentation
Employers may rely upon the validity of the attestation or documentation provided by the employee as substantiation of annual or ongoing coverage so long as the HRA sponsor or its official representative(s) have no actual knowledge that it is false or misleading.
This rule relieves the employer from an obligation to verify the validity of an attestation or accompanying documentation submitted by ICHRA participants and any potential liability.
Reimbursement rules
While an employer or its official representative for the ICHRA has no actual knowledge that a participant (employee or dependent) is not enrolled in individual health coverage (or will not be) for the plan year or portion thereof or the applicable month, then the HRA may reimburse the participant for submitted medical expenses.
When an employer or its official representative for the ICHRA has actual knowledge that a participant is not enrolled in individual health coverage as stated above, the HRA may not reimburse the participant.
If an employer (or its representative) later gains actual knowledge that a participant is not enrolled in individual health coverage, the HRA may no longer reimburse the participant request.
What is “actual knowledge’?
According to FindLaw, actual knowledge is, “awareness of such information as would cause a reasonable person to inquire further.”
Failure to act
Continuing to reimburse an ICHRA participant when the plan sponsor (employer, or its official representative) has actual knowledge that the participate is not (or will not be) enrolled in individual health coverage for the relevant period of time can cause the HRA to fail.
Coverage types (for integration)
Part of substantiating coverage is verifying that the employee’s individual health coverage can be integrated with the ICHRA.
Allowed
- Any individual health coverage insurance policy sold on the open market, on the ACA healthcare market place public exchange, or on a private exchange — These health plans must provide the necessary essential health benefits with no annual or lifetime limits set forth by the ACA as minimum essential coverage (MEC). All will work with the ICHRA for premium and related medical expenses.
- Medicare — Part A, B, or C can be integrated with the Individual Coverage HRA and are eligible for premium reimbursements for Medicare Part A, B, C, or D, and Medigap policies, as well as related medical expenses.
- Student health insurance policies — Since all student health insurance policies are required to comply with the ACA’s essential health benefits with no lifetime or annual limits rule, these policies can be integrated with an ICHRA for reimbursement of premiums and related medical expenses; however, self-insured student health coverage may not be integrated since self-insured student plans are exempt from ACA coverage rules.
Not allowed
- Any kind of group health plan — The ICHRA may not be integrated with any group health plan, including that of a spouse or parent.
- Association health plans may not be integrated with an ICHRA.
- Health care sharing ministries are ineligible for integration.
- Short-term limited duration insurance (STLDI) does not qualify.
- Self-insured student health plans may not be integrated with an ICHRA because these plans are not subject to ACA coverage rules.
Learn more:
ICHRA Important dates for employers: Individual Coverage HRA rules
ICHRA or QSE-HRA — Which is best for your business?
How to set up a new Individual Coverage HRA for employees
Individual coverage HRA brings choice and affordability to employee health benefits
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