ICHRA GuideA Dillingham Benefits resourceReviewed Sep 2026
Every word you'll hit in an ICHRA notice, defined in one line each.
ICHRA
Individual Coverage Health Reimbursement Arrangement. Your employer gives you a monthly allowance; you buy your own plan; they reimburse you tax-free.
Allowance
The maximum monthly amount your employer will reimburse. Set by class, and can vary by age and family size.
Class
A group of employees who get the same ICHRA offer — e.g., full-time, part-time, hourly, salaried, by state.
Individual coverage
A health plan you buy yourself (Marketplace or directly from a carrier), or Medicare. Required to receive reimbursements.
Marketplace / Exchange
HealthCare.gov or your state's equivalent — where ACA-compliant individual plans are sold and tax credits are applied.
Off-exchange
An individual plan bought directly from a carrier rather than through the Marketplace. Same rules; no tax credit; may allow pre-tax payroll deduction of your share.
Premium Tax Credit (PTC)
The government subsidy that lowers Marketplace premiums based on income. Generally can't be combined with an ICHRA.
Affordability
An IRS test: lowest-cost silver self-only premium minus your allowance, compared to a percentage of household income. Determines whether you can choose the PTC instead.
Lowest-cost silver plan (LCSP)
The benchmark premium used in the affordability test. It's a reference number, not necessarily the plan you buy.
Attestation
Your written confirmation, at least yearly, that you're enrolled in individual coverage or Medicare.
Substantiation
Proof — a premium invoice, bank statement, or receipt — submitted with each reimbursement request.
Administrator
The company or platform your employer uses to run the ICHRA: attestation, proof, reimbursements.
Premium-only ICHRA
One that reimburses insurance premiums but not other medical expenses. Keeps HSA eligibility.
Post-deductible ICHRA
One that reimburses medical expenses only after the HDHP deductible is met. Also HSA-compatible.
Opt-out
Declining the ICHRA for the plan year — required to claim the PTC, and only worthwhile if the ICHRA is unaffordable.
Special Enrollment Period (SEP)
A window outside Open Enrollment to buy an individual plan. Being newly offered an ICHRA generally creates one.
ICHRA notice
The written document your employer must generally provide at least 90 days before the plan year, stating your allowance, dates, and rights.
Salary reduction / Section 125
Paying your share of an off-exchange premium pre-tax through payroll. Generally not allowed for Marketplace plans.
Metal tiers
Bronze, silver, gold, platinum — the rough share of costs a plan pays (60/70/80/90%). Higher tier = higher premium, lower deductible.
HDHP
High-Deductible Health Plan — the kind that lets you contribute to an HSA.
Excepted benefits HRA (EBHRA)
A different, smaller HRA for things like dental and vision. Not the same as an ICHRA; you may be offered both.
QSEHRA
A cousin of the ICHRA for small employers with annual caps. Similar mechanics, different limits. If your notice says QSEHRA, most of these guides still apply — but the caps and PTC rules differ.