ICHRA Employee Classes and Why They Matter

As a way to promote equity among employees regarding health plans, ICHRA separates employees into groups based on job-based criteria. These groups/employee 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.

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11 Employee 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

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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.

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Here's another great guide about demystifying ICHRA classes.