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A Comprehensive Guide to Section 111 Reporting for Employers Offering ICHRA Plans

Published on

Oct 3, 2024

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Author

Griffin Baker

If you’re an employer or a broker helping businesses with health benefits, you might have heard about something called an ICHRA. It’s a way for employers to help their employees pay for health insurance and qualified medical expenses. It also reimburses Medicare. This guide walks you through important rules you need to know specifically about Medicare reporting.

What is an ICHRA?

An ICHRA is a type of Health Reimbursement Arrangement (HRA) that allows employers to reimburse employees for qualified medical expenses, including premiums for individual health insurance. This flexible approach enables employers to tailor their health benefits to meet the diverse needs of their workforce.

The Medicare Part D Credible Coverage Notice

Under 42 CFR § 423.56, all group health plans, including ICHRAs, are subject to the Medicare Part D notice and disclosure requirements.

ICHRAs constitute non-creditable coverage under Medicare Part D when evaluated as standalone arrangements. Why? ICHRAs don't automatically include prescription drug coverage as a built-in feature. Unlike some health plans that come with prescription coverage already included, ICHRAs are just reimbursement accounts that employees use to purchase their own health insurance. The prescription drug coverage would depend entirely on which plan the employee chooses to buy with their ICHRA funds.

This means that if your ICHRA is available to employees who may be eligible for Medicare, you must provide them with a Notice of Credible Coverage.

Key Points:

- Employers must inform eligible participants whether their ICHRA is considered “creditable” coverage under Medicare Part D. (ICHRAs represent "non-creditable"coverage.)

- Send out this notice every year and whenever someone becomes eligible for Medicare.

Section 111 Reporting: What You Need to Know

Medicare Section 111 reporting is part of the Medicare Secondary Payer (MSP) requirements, which mandate reporting of certain information related to group health plan (GHP) arrangements, including ICHRAs.

Who is Responsible?

The “responsible reporting entity” is typically the Third-Party Administrator (TPA) managing the ICHRA (if you are our client, this means Venteur). They submit required information to the Centers for Medicare & Medicaid Services (CMS) concerning ICHRA participants enrolled in Medicare.

Quarterly Reporting Requirements:

Annual Benefit Amount: If an employee’s ICHRA has benefits of $5,000 or more, the TPA must report it. If it’s less than $5,000, they don’t need to report it.

Termination Date: If an employee stops using the ICHRA or runs out of benefits, the TPA needs to report when that happened. If the ICHRA is still active each year, they will report that it’s ongoing.

Types of Coverage: If the ICHRA helps with both medical care and prescription drugs, the TPA has to send in two separate reports for that employee.

Compliance Steps for Employers

Talk to Your TPA: Make sure your TPA knows about their reporting duties and is ready to submit the required information every three months.

Help Employees Understand: Explain to your employees about the Medicare notice and make sure they get it on time.

Keep Track of Benefits: Make sure you know how much each employee is getting from their ICHRA so the right information gets reported.

‍Check Your ICHRA Plan: Review your plan annually to make sure it follows all the rules and meets your employees' needs.

Additional Resources

For further details on the Medicare Section 111 reporting requirements, the MMSEA Section 111 MSP Mandatory Reporting GHP User Guide, Version 7.2 provides comprehensive instruction.

FAQs

You got questions, we got answers!

We're here to help you make informed decisions on health insurance for you and your family. Check out our FAQs or contact us if you have any additional questions.

How does an ICHRA work?

ICHRA stands for Individual Coverage Health Reimbursement Arrangement (ICHRA). This health arrangement allows you to pick your own health insurance plan using your employer’s monthly tax-free allowance. These funds can be used to cover insurance premiums, including dental and vision, as well as qualified medical expenses.

What are the benefits of an ICHRA?

Your health plan belongs to you, and you can keep your health insurance if you leave your company.
You get to choose from any qualified health plan on the market. Venteur can help you select a plan where your preferred doctors, providers, and prescriptions are covered.
If you choose a health plan that costs less than your employer contribution, the extra funds are added to Venteur’s Health Wallet, an account used to pay for qualified medical expenses.

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What's the difference between an ICHRA and a Group Plan?

Group health insurance plans are purchased by companies and offered to their employees. Traditional group plans take a one-size-fits-all approach to healthcare, giving employees limited choice when it comes to their coverage options. Employer-sponsored ICHRAs give employees a tax-free allowance to pick any plan on the public exchange that meets their unique needs.

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What is the Health Wallet and how can I use it?

1. What Your Health Wallet Balance Represents:

Your Health Wallet balance could be thought of as a measure of the medical expense reimbursements you're entitled to under your health insurance plan. It's essential to note that it isn't quite like a bank account with a set amount of accessible cash. Rather, consider it as a marker of what you're eligible to get reimbursed for as part of your ICHRA plan.

When you shop for insurance through the app, you will see a dollar amount that is available for out-of-pocket expenses. This amount is what gets contributed to your Health Wallet account for your use in reimbursements. However, depending on how your employer has setup the account, it may be available immediately or it may be available after every monthly invoice.

2. Your Health Wallet Account:

When your account is setup, there is a predetermined way on how your Health Wallet functions for your reimbursement funds. The first scenario is that there is money that has been set aside at the start of the period which can be used for your reimbursements. You may see the entire amount entitled to you is immediately available for medical expense reimbursements. It's like having a store of health benefits ready to be used when you need them.

3. Simplifying the Health Wallet Experience:

We're always striving to enhance your experience and are currently working on making the Health Wallet balance operate more like a pre-paid debit card. This shift aims to streamline the funding process further and allow you quicker and more direct access to your health reimbursements, leading to an even smoother journey for you.

Remember, whether your account shows the funds immediately or after every invoice, it doesn't affect the overall sum you're entitled to under your ICHRA plan; it merely affects the timing of when you will receive the reimbursements.

Your trust is important to us, and we're continually striving to make our services better for you. If you ever have questions about your Health Wallet or anything that would help make for a more understandable benefits experience with us, don't hesitate to reach out to our customer service team.

Do ICHRAs meet the Affordable Care Act's employer mandate?

The Affordable Care Act (ACA) requires that employers with more than 50 full-time equivalent employees provide health insurance to their employees. This is known as the 'employer mandate'.

ICHRAs can meet the mandate as long as they are considered 'affordable.' According to IRS, 'an ICHRA is affordable if the remaining amount an employee has to pay for a self-only silver plan on the exchange is less than 8.39% of the employee’s household income.'

To simplify, this means that the ICHRA contribution an employee receives cannot be less than the lowest-cost silver plan available to the employee - (9.02% of the employee's household income).

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