The Individual Coverage Health Reimbursement Arrangement (ICHRA) has revolutionized how employers offer health benefits, providing unprecedented flexibility and cost control. But here’s what many employers don’t realize until it’s too late: choosing the wrong ICHRA administrator can turn this innovative benefit into a compliance nightmare, frustrate your employees, and ultimately cost more than you save.
With the ICHRA market growing rapidly and new administrators entering the space regularly, how do you separate experienced, reliable partners from those who might leave you scrambling to fix problems down the road?
The stakes are high. Your ICHRA administrator will handle everything from ensuring IRS compliance to managing Protected Health Information (PHI) to directly supporting your employee’s healthcare decisions. A misstep in any of these could result in penalties, privacy violations, or worse: employees unable to access the healthcare they need.
Why You Need an ICHRA Plan Administrator
While technically possible to self-administer an ICHRA, doing so successfully requires extensive expertise and resources most employers simply don’t have. The complexity goes far beyond basic reimbursement processing.
- Compliance Management: ICHRA involves navigating ERISA, HIPAA, IRS regulations, and state insurance laws that change frequently. Missing a single requirement could trigger significant penalties. Understanding ICHRA rules and requirements is just the beginning.
- Privacy Protection: Reviewing employee medical receipts creates HIPAA obligations. Without proper protocols, you risk violating PHI requirements, even with the best intentions.
- Documentation Requirements: The IRS requires maintaining records for seven years, including digital copies of all receipts, legal plan documents, employee notices, and substantiation records.
- Employee Advocacy: Your workers need help understanding individual insurance options, comparing plans, and navigating reimbursements.
- Time Investment: Even small employers typically spend 20+ hours monthly on ICHRA administration when handling it internally. That’s time better spent on strategic initiatives.
What an ICHRA Administrator Actually Does
Understanding an administrator’s full scope of responsibilities helps you evaluate whether potential partners can truly handle your needs. Here’s what you can expect from an ICHRA plan administrator:
- Initial Setup and Design: Your administrator structures your ICHRA plan, determining employee classes, setting contribution amounts, and ensuring the design meets both your budget goals and regulatory requirements. They create all necessary legal documents, including plan documents, SPDs, and employee notices.
- Ongoing Compliance: They monitor changing regulations, update your plan accordingly, handle all IRS reporting including Form 1095-C and PCORI fees, manage annual employee notifications, and ensure continuous HIPAA compliance.
- Employee Experience: ICHRA administrators provide the technology platform for reimbursement submissions, verify employee insurance coverage, process reimbursements promptly, answer employee questions, and often help workers shop for and enroll in individual insurance plans.
- Employer Support: They manage employee eligibility changes, provide reporting and analytics, handle COBRA when applicable, assist with plan amendments, and offer strategic recommendations for optimizing your ICHRA.
7 Essential Factors to Consider When Vetting ICHRA Plan Administrators
With dozens of ICHRA administration companies now in the market, evaluating your options requires a systematic approach. The following seven factors will help you assess each potential partner’s capabilities and determine which administrator aligns best with your organization’s needs and goals. Each factor includes specific capabilities to look for and questions to guide your vendor conversations.
1. Compliance and Regulatory Expertise
Your ICHRA plan administrator serves as your compliance guardian, navigating complex regulations that continue evolving. The right partner transforms compliance from a burden into a background process you rarely need to think about.
Compliance expertise goes beyond basic knowledge; it requires staying ahead of regulatory changes, maintaining proper documentation, and ensuring every aspect of your plan meets federal and state requirements. If you have Medicare eligible employees, your administrator must also understand ICHRA and Medicare integration requirements.
What Your ICHRA Plan Administrator Should Offer:
- SOC audit certification verifying security and compliance controls
- Automated creation of all required legal documents (plan documents, SPDs, employee notices)
- Proactive regulatory updates with clear explanations of how changes affect your plan
- Automated handling of Form 1095-C, PCORI fees, and W-2 reporting
- State-specific compliance expertise for multi-state employers
- HIPAA-compliant processes with signed Business Associate Agreements
- Clear audit trails and documentation retention for IRS requirements
- Medicare Secondary Payer (MSP) rule compliance when applicable
Questions to Ask Potential Administrators:
- How do you stay current with changing ICHRA regulations and communicate updates?
- What’s your process if we face an IRS or DOL audit?
- Can you walk me through your annual compliance calendar?
- How do you handle state-specific requirements for our locations?
2. Technology Platform and User Experience
The platform serves as the backbone of your ICHRA administration, impacting both employer efficiency and employee satisfaction. A well-designed platform eliminates administrative burden while providing employees with an intuitive experience for managing their benefits.
The best platforms balance sophistication with simplicity; powerful enough to handle complex requirements yet intuitive enough that employees can navigate without extensive training. Integration capabilities are crucial for avoiding duplicate date entry and ensuring accuracy across your systems.
What Your ICHRA Plan Administrator Should Offer:
- User-friendly employer dashboard with real-time data and reporting
- Mobile-responsive platform or dedicated app for employee access
- Seamless integration with major HRIS and payroll systems
- Automated employee roster management with bulk upload capabilities
- Digital receipt submission with mobile photo upload
- Instant reimbursement approval for straightforward claims
- Clear display of available funds, pending claims, and reimbursement history
- Automated recurring premium payment handling
- Secure document storage with easy retrieval
- Custom reporting and data export capabilities
- Single sign-on (SSO) options for enterprise clients
Questions to Ask Potential Administrators:
- Can we see a live demo with scenarios specific to our company?
- Which HRIS and payroll systems do you currently integrate with?
- What’s your average reimbursement processing time?
- How do employees submit receipts and track their reimbursements?
- What reporting capabilities do you offer?
3. Employee Support and Education
Your employees need guidance navigating individual insurance markets and understanding their ICHRA benefits. Support quality directly impacts participation rates and satisfaction. The best administrators provide comprehensive support that makes employees feel confident about their healthcare decisions.
Employee support extends beyond answering basic questions. It includes helping workers understand their options, compare plans effectively, and maximize their benefit value. During open enrollment especially, employees need accessible, knowledgeable support to make informed decisions.
What your ICHRA Plan Administrator Should Offer:
- Multiple support channels (phone, email, chat, ticket system)
- Licensed insurance advisors to help with plan selection
- Decision-support tools and plan comparison features
- Dedicated supporting during open enrollment with extended hours
- Comprehensive onboarding materials and welcome communications
- Video tutorials and educational webinars
- Customizable employee communication templates
- Bilingual support options when needed
- Insurance marketplace integration for streamlined shopping
- Personalized plan recommendations based on employee needs
- Clear explanations of how ICHRA works with individual insurance
Questions to Ask Potential Administrators:
- What support channels are available to our employees and during what hours?
- Do you have licensed advisors to help employees choose insurance?
- What educational materials do you provide for employee onboarding?
- How do you support employees during open enrollment?
- Can you show us examples of employee communications?
- How do you assist with change management?
- How do you partner with carriers to ensure a smooth process?
4. Implementation and Onboarding Process
The transition to ICHRA sets the tone for the entire program. A smooth implementation requires careful planning and comprehensive support. The right administrator makes this complex process feel manageable, guiding you through each step while preventing common pitfalls.
Implementation success depends on clear timelines, thorough employee communication, and proper training for your HR team. The best administrators have refined their process through hundreds of implementations, knowing exactly what works and what challenges to anticipate.
What Your ICHRA Plan Administrator Should Offer:
- Dedicated implementation team with a designated project manager
- Detailed project plan with clear milestones and timelines
- Assistance with plan design and employee class structuring
- Data migration support from existing benefits systems
- Custom employee communication campaigns and materials
- Pre-launch employee education sessions or webinars
- Comprehensive HR team training on platform and processes
- Support for open enrollment including employee meetings if needed
- Smooth transition planning from current benefits
- Post-launch support to address early questions and adjustments
- Regular check-ins during the first 90 days
Questions to Ask Potential Administrators:
- What does your typical implementation timeline look like?
- Who will be our main point of contact during implementation?
- How do you help communicate the change to employees?
- What training do you provide for our HR team?
- How do you handle the transition from our current benefits?
5. Pricing Structure and Transparency
Understanding the true cost requires looking beyond monthly fees to the total value provided. Transparent pricing allows you to budget accurately and avoid unexpected expenses that could undermine your ICHRA’s cost effectiveness.
Most ICHRA administrators charge per-employee-per-month (PEPM) fees, but what’s included varies significantly. Consider the value of included services when evaluating total cost. Remember that businesses typically save 30% or more with ICHRA compared to traditional group plans, so administrator fees should be viewed in context of overall savings.
What Your ICHRA Administrator Should Offer:
- Clear, transparent pricing with no hidden fees
- All-inclusive PEPM pricing covering core services
- No set up or implementation fees
- No minimum employee requirements or monthly minimums
- Scalable pricing that remains predictable as you grow
- Included compliance management and documentation
- Included employee support without per-incident charges
- Free platform upgrades and new features
- Transparent contract terms with reasonable cancellation policies
- Regular ROI reporting showing your benefits savings
- Price guarantees or caps on annual increases
Questions to Ask Potential Administrators:
- What exactly is included in your PEPM fee?
- Are there any set up fees or monthly minimums?
- What services would incur additional charges?
- How does pricing change as we add employees?
- What are your contract terms and cancellation policies?
6. Company Stability and Track Record
Your ICHRA plan administrator needs to be a stable, long-term partner. The disruption of switching administrators mid-year can frustrate employees and create unnecessary work for your HR team. Evaluating stability and experience helps ensure you’re choosing a partner who will grow with your organization.
Experience matters particularly in ICHRA administration because the benefit is still relatively new. Administrators who have been in the space since ICHRAs became available in 2020 have navigated various regulatory clarifications and have refined their processes through real-world experience.
What Your ICHRA Plan Administrator Should Offer:
- Established track record administering ICHRAs since 2020 or earlier
- Thousands of satisfied clients across various industries
- Strong client retention rate (90%+ annually)
- Financial stability with solid backing or profitability
- Referenceable clients similar to your organization
- Industry recognition and thought leadership
- Published resources demonstrating expertise (guides, webinars, tools)
- Clear company growth trajectory
- Experienced leadership team with benefits industry expertise
- Comprehensive insurance coverage including cyber liability
- Proven ability to handle companies of your size and complexity
Questions to Ask Potential Administrators:
- How long have you been administering ICHRAs specifically?
- How many employers and employees do you currently serve?
- What’s your client retention rate?
- Can you provide references from companies similar to ours?
- What differentiates you from other ICHRA administrators?
7. Scalability and Future-Proofing
Your chosen administrator must grow with your business and adapt to changing needs. Whether you’re planning expansion, expecting workforce changes, or simply want flexibility for the future, your ICHRA administrator should support your evolution without requiring a platform switch.
The ability to handle various employee classifications becomes crucial as your organization grows. Look for administrators who view your relationship as a long-term partnership, continuously improving their platform and services based on client feedback and industry developments.
What Your ICHRA Plan Administrator Should Offer:
- Proven ability to scale from small businesses to enterprise clients
- Support for unlimited employee growth without platform limitations
- Multi-state administration capabilities with location-based expertise
- Flexible plan design options for different employee classes
- Regular platform updates and feature enhancements
- Proactive regulatory update management
- API availability for custom integrations as you grow
- Enterprise-grade security and infrastructure
- Dedicated account management that scales with your needs
- Strategic consulting for benefits optimization
- Clear product roadmap showing ongoing innovation
- Strong partnerships with insurance carriers and other vendors
Questions to Ask Potential Administrators:
- How does your platform handle significant employee growth?
- Can you support employees in all 50 states?
- What new features have you released in the past year?
- How do you incorporate client feedback into development?
- What’s your vision for ICHRA administration in the next 3-5 years?
Making Your Final Decision
After evaluating potential ICHRA plan administrators across these seven factors, you’ll likely have a wealth of information to process. The key is transforming that information into a clear decision that aligns with your organization’s specific needs and priorities. No single administrator will be perfect in every area, but the right partner will excel in the factors that matter most to your situation while meeting minimum standards across all others.
- Create a Comparison Framework: Build a simple scorecard rating each vendor across these seven factors. Weight factors based on your priorities.
Compliance might matter most for highly regulated industries, while employee support might top the list for companies with less tech-savvy workers. - Involve the Right People: Include HR, finance, IT, and even employee representatives in evaluation. Each perspective reveals different strengths and weaknesses.
- Verify Everything: Request references and actually call them. Ask for proof of compliance certifications.
Review actual client contracts, not just proposals. - Negotiate Terms: Remember that contracts are negotiable. Push for favorable SLAs, termination clauses, and price guarantees.
Take the Next Step with Confidence
Choosing the right ICHRA plan administrator transforms this innovative benefit from a complex challenge into a strategic advantage. The right partner ensures compliance, delights employees, and saves you significant time and money.
Take Command has been the leader in HRA administration since these arrangements became available, currently serving over 7,000 organizations nationwide. As the #1 HRA administration platform, we’ve built our services around real employer needs, not theoretical best practices.
Ready to see how our ICHRA administration works?
→ Schedule a personalized demo of our ICHRA administration platform
→ Download our comprehensive ICHRA Guide
→ Calculate your potential savings with ICHRA
Frequently Asked Questions
What’s the typical cost of an ICHRA plan administrator?
Most ICHRA administrators charge between $5-$20 per employee per month (PEPM), depending on the services included. Some add setup fees ranging from $500-$5,000, and may have minimum monthly charges. When evaluating costs, consider what’s included in the base price versus add-on services. Remember that proper administration often saves more through compliance protection and efficiency gains than the monthly fee costs.
Can we switch ICHRA administration companies if we’re not satisfied?
Yes, you can switch ICHRA administrators, though the process requires careful planning. Most contracts have 30-90 day termination notice requirements. You’ll need to coordinate data migration, ensure continuous coverage for employees, and communicate changes clearly. The best time to switch is typically at your plan year renewal. Review any potential termination fees in your current contract before making the decision.
How long does it take to implement an ICHRA with an administrator?
Implementation typically takes 30-60 days, depending on your organization’s complexity and readiness. This includes plan design, document creation, system setup, data migration, employee communications, and training. Rushing implementation often leads to problems, so be wary of administrators promising unrealistic timelines. Open enrollment adds additional time but ensures smooth employee transition.
Do ICHRA administrators help employees choose health insurance plans?
Many ICHRA administrators provide insurance selection support, though the level varies significantly. Some offer licensed insurance advisors who can provide personalized recommendations, while others provide decision-support tools and plan comparison features. Ask specifically about this service, as quality employee support dramatically impacts ICHRA success and employee satisfaction.
Should we choose a local ICHRA administrator or does location not matter?
Location rarely matters for ICHRA administration since most services are delivered digitally. More important factors include experience with your industry, ability to handle your state’s specific requirements, and quality of support. However, some employers prefer administrators who understand their local insurance markets or can provide occasional in-person support for implementations or training.
How do we evaluate an ICHRA administrator’s compliance capabilities?
Look for concrete evidence of compliance expertise: SOC audit certifications, clear explanations of their compliance processes, experience handling audits, and up-to-date knowledge of regulations. Ask them to explain complex compliance scenarios relevant to your situation. Watch for vague answers, no third-party certifications, or inability to explain specific requirements like Medicare Secondary Payer rules or COBRA administration.
Additional Resources
Take Command is the first-to-market leader and #1 HRA administration platform in the country, trusted by over 7,000 leading organizations. Save 30% or more on your health benefits with ICHRA—let us show you how.
