Georgia Navigator Practice Exam

What is a disadvantage of using an ICHRA?

1. Employees have no freedom to choose their health plans

2. Employees may not receive premium tax credits if the plan is deemed affordable

3. All costs are paid upfront by the employer

4. Employers have no control over plan offerings

The correct answer is: Employees may not receive premium tax credits if the plan is deemed affordable

The chosen answer highlights a significant aspect of the Individual Coverage Health Reimbursement Arrangement (ICHRA). Under an ICHRA, employers reimburse employees for their health insurance premiums, which can influence employees' eligibility for premium tax credits. If the health plan selected by the employee is considered "affordable" based on the employer's reimbursement, that can eliminate the employee's access to those tax credits. When a plan is classified as affordable, it means that employees are not allowed to receive premium tax credits from the federal government, which can be a considerable financial assistance for those purchasing individual health insurance on the marketplace. This situation can discourage employees from participating in ICHRA, particularly if they could have benefited from those credits otherwise. Comparatively, other options do not correctly reflect the nature of ICHRAs. For instance, employees using ICHRAs do have the freedom to choose their health plans, which counters that assertion. Additionally, while employers do cover health care costs upfront in the sense of reimbursing employees, it's not entirely accurate to say all costs are paid upfront as it depends on reimbursement claims, and employers retain control over plan offerings as they dictate the parameters of the ICHRA. Understanding affordability and tax credit implications is crucial to comprehending the dynamics of