And Why Your Clients Need One TPA for Both
There’s no shortage of ICHRA administrators in the market. But before the question of who administers your clients’ ICHRAs can be answered well, there’s a compliance question that needs to be on every broker’s radar first…one that changes the calculus on ICHRA administration entirely.
ICHRAs Can Trigger COBRA Obligations
When an employee loses eligibility for an employer’s ICHRA (due to a qualifying event such as termination, reduction in hours, etc.), that ICHRA may be subject to COBRA continuation requirements. This mirrors the obligations that apply to traditional group health plans.
In practical terms: the employee must be offered the opportunity to continue receiving ICHRA reimbursements* through COBRA. That means proper qualifying event notices, election notices, and the standard COBRA election window must be administered.
Employers who implement an ICHRA without understanding this overlay can find themselves out of compliance and facing exposure for failing to provide required notices or continuation coverage rights. The same COBRA notice infrastructure that applies to traditional group plans applies here. Employers and their advisors need to ensure those processes are in place.
The FAQs
Q: Is every ICHRA subject to COBRA?
Generally yes, if the employer is subject to federal COBRA (typically 20+ employees). Smaller employers should review applicable state mini-COBRA laws.
Q: What does COBRA continuation of an ICHRA look like?
A qualified beneficiary can elect to continue ICHRA participation and receive reimbursements* for individual coverage premiums and eligible expenses.
Why Integrated Administration Matters
When ICHRA and COBRA administration are handled by the same TPA, the compliance gap narrows significantly. Qualifying event processing flows seamlessly from one benefit to the other. Notice obligations are tracked and fulfilled under both requirements. There’s one point of contact for all compliance questions and less administrative burden on the employer and their HR team.
This is where the choice of administrator matters as much as the decision to offer an ICHRA in the first place.
Why Brokers Choose Diversified
After nearly four decades of account-based benefit administration, the answer comes down to a few things that matter most.
- You stay Agent of Record. Always. When Diversified administers an ICHRA for your client, you retain the Agent of Record status. We handle the administration. You maintain the relationship. We partner with over 1,000 brokers because that model works better for everyone, especially the employer.
- Our platform is built for ICHRA. Diversified’s Next Generation ICHRA platform automates the reimbursement process – depositing funds directly into employees’ checking or savings accounts on a schedule the employer selects. This eliminates claim delays and reduces administrative errors. Our platform handles reimbursements for individual health insurance premiums (including Medicare), as well as eligible out-of-pocket expenses, all within a single administration framework.
- COBRA administration that’s already in place. We’ve been administering COBRA since the law’s early days. When you bring an ICHRA client to Diversified, COBRA coordination isn’t an afterthought…it’s built into how we work. Qualifying events are processed across both benefits. Notice obligations are tracked and fulfilled. One TPA, complete coverage.
- The Full Suite. Diversified also administers FSAs, HRAs, and HSAs. So your clients get a single point of contact, consistent service, and a TPA that knows their plan inside and out.
Ready to Get Started?
New ICHRA + COBRA packages = 50% off setup fees (up to $500). A strong incentive to have the conversation now with clients weighing their options heading into the next plan year.
Visit https://www.dbsbenefits.com/broker-resources/ichra/ to learn more or connect with our team.
*Note: When a former employee elects COBRA continuation of an ICHRA, they become responsible for paying the employer the full value of the monthly reimbursement allowance in order to retain access to the benefit. The employer is no longer contributing; the former employee is essentially self-funding their access to the reimbursement arrangement.