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 * Enrollment Platform
   * Overview
   * Broker
   * Business Owner
   * Executive
   * Human Resources
 * Resources
   * Blog
   * Health Benefits Glossary
   * Case Studies & Guides
   * Explaining ICHRA
   * Savings Calculator
 * About
   * About
   * Team
   * Careers
 * Contact us

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Human Resources


ACHIEVE MAXIMUM FLEXIBILITY IN YOUR COMPANY’S HEALTHCARE SPENDING WITH ICHRA
EMPLOYEE CLASSIFICATIONS




One of the top benefits of choosing an ICHRA, or Individual Coverage Health
Reimbursement Arrangement, for your employee health insurance is the flexibility
that comes with separating employees by classification. Your business can choose
to offer an ICHRA to its entire workforce, to offer it only to certain classes
of employees, or to contribute different reimbursement amounts by class.

 

This versatility has multiple advantages over a standard group plan, including
helping employers to prioritize their budget for health benefits and allowing
companies to target their most highly valued employees with an increased level
of benefits. Additionally, it can also incentive businesses to offer health
benefits to employee classes it may not have in the past, like part-time or
seasonal workers. 

Employee classifications cannot be used to discriminate against employees or
side-step health risk claims, but they can separate employees into groups based
on legitimate job-based criteria like hours worked or location. Each class needs
to have only one benefit offering, and allowances can be increased within each
class based on age (provided the amount does not exceed a 3:1 ratio, wherein the
oldest individuals cannot pay more than three times more in premiums than the
youngest individuals do). If an ICHRA is offered to a class, it must be offered
to everyone in that class.  

So, what are the separate ways employees can be classified? When using an ICHRA,
there are 11 employee classes that businesses can leverage when determining
benefit eligibility and allowance amounts. Let’s look at the characteristics of
each class to determine how an organization might create its own personalized
system. 

Full-Time Employees 
Typically, full-time employees (also called permanent employees) work 30-hours a
week and have no set end date for their employment. For a company with over 50
employees, full-time employees and full-time-equivalent employees must be
offered health care coverage under the Affordable Care Act (ACA).   

Part-Time Employees 
Part-time employees (defined as employees who are not full-time under Internal
Revenue Code § 4980H) Typically work fewer than 30 hours a week and are usually
paid on an hourly basis.  

Seasonal Employees 
Employees who are hired into their positions on a short-term basis, with a fixed
end date to the employment. This could be during the holidays, just for summer,
or whatever time of year a business may have extra staffing needs. 

Temporary Employees of Staffing Firms 
Like seasonal employees, temp employees are hired on a short-term basis, but
they are formally employed through a staffing firm, rather than through the
business directly. 

Salaried Employees 
Employees who are paid on a salaried basis, not hourly, and who are not eligible
for overtime pay. For employers with multiple collective bargaining agreements,
each one qualifies as a separate class under ICHRA. 

Hourly Employees 
These are non-salaried employees who are paid on an hourly basis. 

Employees Covered Under a Collective Bargaining Agreement 
Employees included in a unit covered by a particular collective bargaining
agreement in which the ICHRA sponsor participates 

Employees in a Waiting Period 
Employees who have not satisfied a waiting period for coverage, if the waiting
period complies with health care reform’s waiting period requirements 

Employees in Different Geographic Locations 
Employees who live outside the individual health insurance geographic rating
area of the organization. 

Foreign Employees Who Work Abroad 
Employees working outside the United States. 

A Combination of Two or More of the Above 
Additional classes can be created by the employer by combining one or more of
the above classifications. For instance, an employer may create separate classes
for part-time employees in different geographic locations.  


Classes are determined at employer level, rather than on a controlled group
basis. This allows different employers within a controlled group to vary
benefits between affiliates with respect to classifications that could be
considered a single class within a single employer.  


A minimum-size requirement applies in certain circumstances, if the employer
also offers traditional group health plan coverage. The regulations also include
special rules for student employees who are offered student premium reduction
arrangements. 


There is no limit to how many classes may be created. Using an ICHRA and
defining employee classes based on business needs helps a company to create a
completely customized benefits solution to meet their own budget priorities as
well as the needs of their employees.  


Speak to a SureCo Benefits Expert today to design an ICHRA that works for your
company. 

 

Download SureCo's ICHRA Guide

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