ICHRA (Individual Coverage Health Reimbursement Arrangement)

The one-sentence answer

An ICHRA is an arrangement in which an employer puts money toward health coverage the employee buys for themselves, rather than the employer running a group health plan.

For a Self-Determination Program participant this is one of the ways a caregiver can be offered health coverage — and the money comes out of the participant's own spending plan, on top of employer burden.

It is a way of meeting a health coverage obligation, not the obligation itself — see ACA employer mandate.

What this means for you

It is not a free benefit. You fund it. If you offer a caregiver health coverage through an ICHRA, that contribution is a real cost inside your budget, and every dollar of it is a dollar not buying support hours. That trade-off is the whole decision, and it should be made deliberately rather than discovered later.

What you get for it is a genuine recruiting advantage. Most FMS providers offer no health benefit mechanism at all. Being able to offer coverage is one of the few levers a family has when competing for a good caregiver — and keeping a good caregiver is the hardest problem most self-directing families have.

For the detail-oriented

DDS treats health insurance as an elective employment cost that belongs in the spending plan. The April 2024 employer burden directive says an FMS "may be required to offer certain optional benefits such as Affordable Care Act health insurance or the CalSavers Retirement Savings Program," that a participant and their staff "may agree to include other costs related to employing staff such as health insurance," and that "all required and elected staff employment costs must be included in the participant's spending plan."

So the ICHRA contribution is not part of the burden percentage — the burden list is closed and does not include it. It is a separate line in the plan. See employer burden.

The mechanics depend on your FMS, so ask them

There is no single answer to "how does the ICHRA work" in this program, because the answer is not set by DDS. It depends on your FMS and on which company they use to administer it. Two providers can both offer an ICHRA and run it quite differently.

So if health coverage matters to you or to someone you employ, these are the questions to put to the provider directly:

• Do you offer an ICHRA at all? Not every FMS does, and some offer a small group plan instead, or nothing.
• Who administers it, and what does the employee actually have to do to use it?
• How is the contribution set, and how does it reach the employee?
• How does it show up in payroll — and therefore in the spending plan, since the contribution is a separate line rather than part of the employer burden percentage?
• When can someone enrol, and what happens if they join mid-year?

Get the answers before you hire someone on the strength of the benefit. This is one of the clearest cases of the fourth kind of disagreement — where nothing is being read wrongly and providers simply do it differently. See when you are told two different things.