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.

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 rules that keep it fair

Within a class, the arrangement must be offered on the same terms — though you can still vary the dollar amount by employee age and number of dependents. There are also minimum class-size rules that apply when you offer some classes a traditional group plan and others an ICHRA, to prevent steering high-cost employees onto the individual market.

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. A broker helps you design classes that match your team and your budget while staying compliant.