The typical 90 day employee notice for new ICHRAs has been shortened due to COVID-19. An FAQ was just shared by the Department of Labor that talks about ICHRA and Coronavirus Relief legislation (like the FFCRA and CARES Acts). While the ICHRA rules are not new, the FAQ confirms what we’ve been saying all along: Employees should be given ample lead time to understand their new ICHRA benefit, choose and purchase a qualified health plan, and understand how it will impact their premium tax credits to be able to enroll on day 1 of their ICHRA benefit.
How COVID affects ICHRA during national emergency
Due to the ongoing pandemic, a special allowance has been initiated during the national emergency that the 90 day employee notice for ICHRA is not mandatory and just needs to be delivered as soon as possible for the sake of giving employees enough time to shop for a marketplace plan. We believe that 45 days, while half the time as the usual 90, would give them plenty of time to choose a plan to be effective for the first day of their ICHRA.
Here’s what the Department of Labor said about it:
“The Departments recognize that some employers are considering offering an individual coverage HRA for the first time. The Departments encourage employers affected by the COVID-19 pandemic to consider whether they can provide the individual coverage HRA notice at least early enough in advance of the first day on which the individual coverage HRA may take effect so that eligible employees have sufficient time to read and understand the notice, make an informed decision whether or not to enroll in the individual coverage HRA, and exercise their special enrollment right to individual health insurance coverage so that the coverage would start no later than the first day of the individual coverage HRA plan year.”
What does it mean?
While the FAQ doesn’t present any new requirements, it is important to remember that during the pandemic, employees do not have to be notified 90 days in advance. Instead, it should just be as soon as possible. The reason is that without sufficient time to research their benefit and shop for a plan, employees might not properly explore all of their options and may enter a situation uninformed of the implications for premium tax credits.
To help employers, TCH notices are electronic and immediately available upon sign up, so you can share with your employees as soon as you are ready.
The FAQs note that while the DOL’s previously-announced flexibility surrounding legally required notices would also apply to this ICHRA notice, employers should carefully consider whether delaying provision of such notice could adversely impact employees.
Before FFCRA and CARES, there was already flexibility around the notice based on when the company establishes the HRA and when the employee becomes eligible. We still recommend they give the notice as early as possible though.
What should the employee notice include?
Each ICHRA employee notice should include the following pieces of information:
- The maximum reimbursement amount for each participant
- HRA effective date
- Start and end dates for the plan year
- A statement that enrollment in a qualified health plan (individual coverage, Medicare) is required to participate
- A statement that coverage obtained through the ICHRA is not ERISA coverage
- A statement that the participant can opt out of and waive future HRA reimbursements,
- rules on how the HRA interacts with the premium tax credit including that employees cannot get a tax credit if they are offered an affordable HRA
- A statement that the participant must inform any exchange to which the participant applies for advance payment of the PTC
Helpful small business coronavirus resources
We’ve put together a couple of resources to help navigate Coronavirus, including our blog on Small Business Health Insurance and Coronavirus, our take on how the Families First Act helps small businesses, as well as our Coronavirus roadmap for small business owners.
Other resources that many small business owners are finding helpful as they reevaluate their benefit costs are our new Small Business Health Insurance Guide and our CEO’s guest post in Employee Benefits Advisor on how our clients are using HRAs to maintain benefits and stay afloat during COVID-19.