What documents do I need to set up an ICHRA?

A compliant plan document and the required ICHRA employee notice. Administration software or a broker generates both; you’ll also collect proof of each employee’s coverage.

When do I have to notify employees?

The standard is at least 90 days before the start of the plan year. New hires mid-year are notified before their coverage start.

Can I set up an ICHRA myself?

You can, but most employers use software or a broker to handle plan documents, notices, substantiation, and employee enrollment correctly.

Commercial

How to set up an ICHRA: a step-by-step guide

Setting up an ICHRA is more straightforward than most employers expect. This is the full ICHRA setup process — from choosing employee classes and allowances to sending the required notice and reimbursing your first claims, tax-free.

Key facts

Typical timeline: 2–6 weeks to launch
Required notice: 90 days before plan year (standard)
Who can set it up: Any employer with a W-2 employee
Hardest part: Plan design + employee enrollment

Step 1: Confirm you’re eligible

Any employer with at least one W-2 employee who isn’t a self-employed owner or owner’s spouse can offer an ICHRA. There’s no minimum or maximum company size.

Step 2: Design your classes and allowances

Decide whether everyone gets the same allowance or whether you’ll vary it by employee class (for example full-time vs part-time, salaried vs hourly, or by location). You can also scale amounts by age and family size. Good design keeps the benefit fair and your costs predictable.

Step 3: Set your start date

Pick a plan-year start date that leaves employees enough time to enroll in individual coverage — typically 60 days out. Aligning with a Special Enrollment Period or open enrollment makes enrollment smoother.

Step 4: Create the plan document and send the ICHRA notice

You need a compliant plan document and must give employees the required ICHRA notice — generally at least 90 days before the start of the plan year. The notice explains the allowance and how ICHRA interacts with ACA subsidies. Administration software or a broker generates these for you.

Step 5: Help employees enroll

Employees buy an individual plan on or off the marketplace. This is the step where a broker earns their keep — guiding employees to plans that fit their needs so the rollout doesn’t stall.

Step 6: Substantiate coverage and reimburse

Collect proof that each employee has qualifying individual coverage.
Process tax-free reimbursements monthly, ideally through payroll.
Keep records for compliance and renewals.

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Frequently asked questions

Most employers launch in two to six weeks. The main timing constraint is the required employee notice and giving people enough runway to enroll in individual coverage.

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