ICHRA employee classes, explained

Why classes exist

Classes let you tailor benefits to your workforce — for example a richer allowance for full-time staff than for part-time — without offering ad-hoc amounts that would break the rules. Everyone in the same class must be offered the arrangement on the same terms, which keeps the benefit fair and compliant while still giving you flexibility.

The 11 permitted ICHRA classes

• Full-time employees
• Part-time employees
• Seasonal employees
• Salaried employees
• Hourly (non-salaried) employees
• Employees in a waiting period
• Employees covered by a collective bargaining agreement
• Employees in the same geographic rating area
• Temporary employees of a staffing firm
• Non-resident aliens with no U.S. income
• A combination of two or more of the above

The same-terms rule

Within a class, the ICHRA must be offered on the same terms to everyone. You can''t give two full-time employees in the same class different deals based on who they are. This is the core fairness rule — and it''s what keeps an ICHRA from being used to single out individuals.

Varying amounts by age and family size

Even within a single class offered on the same terms, you can vary the dollar allowance by employee age and by number of dependents. This lets the benefit track the real cost of coverage — older employees and larger families face higher premiums — without violating the same-terms rule. Most administrators handle this scaling automatically.

Minimum class-size rules

When you offer some classes a traditional group plan and other classes an ICHRA, minimum class-size rules apply — to prevent steering high-cost employees off the group plan and onto the individual market. The minimum depends on your total employee count (larger employers face larger minimums). If you''re only offering an ICHRA (no group plan), these minimums generally don''t come into play.

Combining classes

You can combine two or more of the permitted classes to create a more specific group — for example, full-time employees in a particular geographic rating area. Combinations give you finer control, but they still must follow the same-terms and minimum-size rules. A broker helps design combinations that are both useful and compliant.

Designing classes for a small business

Most small businesses keep it simple: one or two classes (often full-time, sometimes plus part-time) with allowances scaled by age and family size. You don''t need to use all 11 classes — they''re a toolbox, not a requirement. The goal is to match your benefit to your team and budget while staying compliant, and a broker helps you draw the lines sensibly.

Common class-design mistakes

• Offering different amounts to individuals within the same class (violates same-terms).
• Ignoring minimum class-size rules when also offering a group plan.
• Over-engineering with too many classes when one or two would do.
• Forgetting that amounts can already vary by age and family size within a class.

Waiting-period and new-hire classes

You can use a waiting period as its own class, delaying ICHRA eligibility for new hires up to the plan's permitted limit — a useful way to manage turnover before extending the benefit. New hires then enter on defined terms once the waiting period ends.

How classes affect affordability testing

Affordability is ultimately tested per employee based on their age and location, but the allowance you set for their class is the starting point. Designing your classes and allowances with affordability in mind is what keeps a larger employer compliant across the whole group.