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Which health plans’ premiums are eligible for reimbursement under an ICHRA?

Author: Louise Norris | Date Posted: July 8, 2025

ICHRA stands for Individual Coverage Health Reimbursement Arrangement. So it’s no surprise that the premiums employees with individual health insurance pay are eligible to be reimbursed through an ICHRA (up to the limits imposed by the employer). But what counts as “individual coverage” for an ICHRA, and are there any other types of premiums that can be reimbursed with an ICHRA? Let’s take a look.

Premiums for two general types of coverage qualify for reimbursement under an ICHRA:¹²

Individual health insurance
Medicare

And it’s important to note that, to be eligible for medical care expenses to be reimbursable by the ICHRA, if offered by an employer, an employee (and any covered dependents) must have one of those two types of coverage.³

Individual health insurance premiums qualify for ICHRA reimbursement

Individual health insurance means major medical coverage that a person purchases for themselves rather than through an employer or other group health plan. It does not include short-term health insurance.⁴

ICHRA-eligible individual health insurance includes:

Marketplace coverage. (The enrollee will not be eligible for Marketplace subsidies if the enrollee is utilizing an ICHRA or is offered an ICHRA that is considered affordable coverage.)
ACA-compliant individual coverage obtained outside the Marketplace. (This is also known as “off-exchange” coverage. An employer who offers the option for pre-tax payroll deduction of the employee’s share of the premium can provide that option only if the coverage is not obtained in the Marketplace.)⁵
Grandmothered or grandfathered individual health insurance. Individuals can no longer purchase these plans, but if a person is already enrolled in one and is offered an ICHRA benefit, the premiums are eligible for reimbursement.⁶

Learn more about individual health insurance.

Medicare premiums can be reimbursed with an ICHRA

Employers can also use ICHRAs to reimburse employees for premiums paid for Medicare Part A, Medicare Part B, Medicare Advantage, Medicare Part D prescription drug coverage, and Medicare Supplement insurance (Medigap).⁷

To be eligible for ICHRA reimbursements, a Medicare beneficiary must be enrolled in either Medicare Part A and Part B, or Medicare Advantage.¹

Which types of health plans are not eligible for ICHRA reimbursement?

ICHRA reimbursement of premiums is only available for the types of coverage described above. ICHRA-ineligible health plans and products include:

Short-term health insurance.⁸
Excepted benefits. (Examples include dental and vision insurance, accident insurance, fixed indemnity plans, and critical illness plans.)⁹
Employer-sponsored group coverage, including association health plans,¹⁰ COBRA continuation coverage, or coverage offered by a spouse’s employer.¹¹
Health care sharing ministry plans.¹²
Direct primary care memberships. DPC memberships are not considered health insurance¹³
TRICARE coverage.¹⁴

Employers have the option to reimburse premiums for some of these types of coverage – such as short-term health insurance, excepted benefits, and COBRA – by offering an excepted benefit HRA.¹⁵

Unlike ICHRAs, which do not have caps on the amount an employer is allowed to reimburse (unless the employer is an Applicable Large Employer),¹⁶ excepted benefit HRA reimbursements are limited to no more than $2,150 per employee in 2025.¹⁷

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.

Footnotes

“Health Reimbursement Arrangements and Other Account-Based Group Health Plans” Federal Register: Internal Revenue Service, Employee Benefits Security Administration, and the Health and Human Services Department. June 20, 2019 ⤶ ⤶
In addition to premiums, employers have the option to also reimburse any qualified medical expenses for employees who utilize an ICHRA. To be eligible for the ICHRA, the employee (and covered dependents) must have either individual coverage or Medicare, and those are the policies for which premiums can be reimbursed. Other qualified medical expenses can include out-of-pocket costs associated with those policies, as well as additional medical expenses outlined in IRS Publication 502. This can include, for example, out-of-pocket costs for services that aren’t covered by the person’s individual coverage, such as dental and vision care. ⤶
“Health Reimbursement Arrangements and Other Account-Based Group Health Plans — Interaction of Individual Coverage HRAs and Medicare” Federal Register: Internal Revenue Service, Employee Benefits Security Administration, and the Health and Human Services Department. June 20, 2019 ⤶
“Title 45 § 144.103 Definitions, Individual Health Insurance” Code of Federal Regulations. Accessed June 18, 2025 ⤶
“FAQs on New Health Coverage Options for Employers and Employees, Question 9” Internal Revenue Service. June 13, 2019 ⤶
“Health Reimbursement Arrangements and Other Account-Based Group Health Plans” Federal Register: Internal Revenue Service, Employee Benefits Security Administration, and the Health and Human Services Department. June 20, 2019 ⤶
“Health Reimbursement Arrangements and Other Account-Based Group Health Plans” Federal Register: Internal Revenue Service, Employee Benefits Security Administration, and the Health and Human Services Department. June 20, 2019 ⤶
“Health Reimbursement Arrangements and Other Account-Based Group Health Plans – Short-Term Limited Duration Insurance” Federal Register: Internal Revenue Service, Employee Benefits Security Administration, and the Health and Human Services Department. June 20, 2019 ⤶
“Health Reimbursement Arrangements and Other Account-Based Group Health Plans – Excepted Benefits” Federal Register: Internal Revenue Service, Employee Benefits Security Administration, and the Health and Human Services Department. June 20, 2019 ⤶
“Health Reimbursement Arrangements and Other Account-Based Group Health Plans – MEWAs, Including AHPs” Federal Register: Internal Revenue Service, Employee Benefits Security Administration, and the Health and Human Services Department. June 20, 2019 ⤶
“Health Reimbursement Arrangements and Other Account-Based Group Health Plans – Spousal Coverage” Federal Register: Internal Revenue Service, Employee Benefits Security Administration, and the Health and Human Services Department. June 20, 2019 ⤶
“Health Reimbursement Arrangements and Other Account-Based Group Health Plans – Health Care Sharing Ministry Plans” Federal Register: Internal Revenue Service, Employee Benefits Security Administration, and the Health and Human Services Department. June 20, 2019 ⤶
”The Direct Primary Care Model: Why It Does Not Count as Insurance” Amity Health. Accessed June 27, 2025 ⤶
“Health Reimbursement Arrangements and Other Account-Based Group Health Plans – TRICARE” Federal Register: Internal Revenue Service, Employee Benefits Security Administration, and the Health and Human Services Department. June 20, 2019 ⤶
“What is an excepted benefit Health Reimbursement Arrangement (HRA)?” Centers for Medicare & Medicaid Services. Dec. 14, 2022 ⤶
“FAQs on New Health Coverage Options for Employers and Employees, Question 6” Internal Revenue Service. June 13, 2019 ⤶
“Revenue Procedure 2024-25” Internal Revenue Service. Accessed June 18, 2025 ⤶