The individual coverage health reimbursement arrangement (ICHRA) allows businesses of all sizes to reimburse employees for their personally purchased health insurance expenses.
The ICHRA is beneficial for businesses with fewer than 50 employees because they are not obligated to provide health benefits under the Affordable Care Act.
When they do provide coverage, they expose themselves to a $100-per-day penalty for each employee. The ICHRA avoids this penalty.
The ICHRA offers several benefits to the employer:
- the flexibility to choose the reimbursement limits,
- the ability to offer different plans to different employees based on classifications, and
- the ability to offer a cafeteria plan that allows employees to pay pre-tax for additional insurance coverage above what the ICHRA reimburses
There are restrictions on who can participate. Employees eligible for an ICHRA are those enrolled in individual exchange coverage, other individual insurance coverage, or Medicare.
More-than-2-percent S corporation shareholders, their family members, and Form 1040, Schedule C taxpayers are not eligible to participate in an ICHRA.
If you plan to offer an ICHRA, you need to provide your employees with at least a 90-days’ notice before the beginning of the plan year.
We encourage you to start planning now if you wish to offer an ICHRA on January 1, 2024, as this gives you a target date for the ICHRA notice of October 2, 2023.
How We Can Help
Sterling Tax and Accounting is here to help your business with tax planning! Our comprehensive approach to tax planning helps reduce your overall tax liability and keep more money in your pocket. If all your accountant does is file your taxes, chances are they are making you pay more than your fair share of taxes.
Learn how to proactively save on taxes by scheduling a call with our tax planning specialists.
Our tax planning, accounting & business services help you stay on track. Sterling Tax & Accounting will work with you to optimize your business and minimize your taxes. We will work to provide you and your business with the tools and resources you need to build a solid tax and business foundation. We’re a trusted CPA Firm in Sarasota, Florida. We serve clients all over the US, and proactively work to minimize their taxes.
Welcome to the Sterling Standard of business! Want to learn more? Schedule a meeting with our tax planning team here: https://www.sterling.cpa/contact-us/
Learn how Sterling Tax & Accounting can add value to your business!
Your virtual accounting and technology experts providing back office, compliance & strategic solutions for busy professionals.