In September 2021, the Centers for Medicare & Medicaid Services (“CMS”) announced an extended open enrollment period for federal exchange coverage until January 15. During this period, individuals may have their financial situations reviewed for tax credit eligibility purposes and may purchase individual health insurance without having to demonstrate a change in circumstances. The announcement clarifies that states running their own state exchanges are still free to set their own enrollment deadline, as long as that date is not earlier than December 15. To see if a particular state has a federal or state-operated exchange, see CMS.gov State-based Exchanges.
So, how does the new extended open enrollment period for federal exchanges affect ICHRAs?
The short answer is it really does not impact an ICHRA, (1) an employee that qualifies for tax credits and chooses to purchase coverage through the exchange using those tax credits loses the ability to participate in an ICHRA; and (2) the extended open enrollment period operates independently of an ICHRA and does not change how an ICHRA operates.
ICHRA Coverage
An ICHRA is a self-insured medical plan offered by an employer that is also a group health plan. It operates on a reimbursement basis. To be covered under the ICHRA, an eligible employee must (1) have individual health insurance coverage; and (2) not be covered under impermissible other coverage, including individual health insurance coverage purchased with tax credits through the government operated exchange.
ICHRAs operate on a plan year, typically running January 1 to December 31. An employee must have individual health insurance coverage in place as of January 1 to participate in the ICHRA plan year that begins January 1. If the employee begins participation during the plan year (e.g., first becomes eligible during the plan year, the employer starts the ICHRA other than January 1), the employee must have individual health insurance coverage as of that start date. In both situations, it is the employee’s responsibility to get the individual health insurance coverage and have it in place for the start of the employee’s ICHRA coverage.
NOTE: While the open enrollment period for the exchange runs until January 15, 2022, it does not mean an employee can wait until that date to get the individual health insurance coverage required to participate in an ICHRA. The ICHRA begins on January 1, 2022. The employee’s individual health insurance must be in place by January 1, 2022, for the employee to participate in the ICHRA. An employee with individual health insurance coverage purchased with an effective date after January 1, 2022, will have individual health coverage but will not be able to participate in the ICHRA.
Please note that open enrollment for the exchange is not the same as the open enrollment for Medicare. Open enrollment for Medicare has not been extended.