Looking for ICHRA eligible expenses? Although it’s still considered the new kid on the block, the ICHRA (individual coverage health reimbursement arrangement) keeps getting better and better. We already love it because it is user-friendly, highly customizable, and tax-advantaged. Let’s take a deep-dive into what is and what isn’t available for reimbursement so you and your employees can get the most out of their health reimbursement arrangement.
The individual coverage HRA, based on reimbursing employees for health insurance rather than buying it for them, gives employers a couple different choices in terms of what can be reimbursed under their ICHRA plan.
Employers can choose what they want their ICHRA to reimburse.
Qualified health plan insurance premiums are reimbursed through an ICHRA as well as certain medical expenses. Reimbursing for qualified medical expenses is more generous, although less predictable for budgeting purposes. HRA eligible expenses and ICHRA eligible expenses follow the same rules and consist if the same list of medical expenses.
What’s great about both options is that both types of reimbursement, whether it’s reimbursing for medical premiums or reimbursing for medical expenses, is tax-free. No employer tax, no income tax, no payroll tax.
ICHRA eligible plans include:
- Major medical plans purchased on the exchange (Bronze, Silver, and Gold)
- Medicare (Part A+B, or Part C)
- Catastrophic Plans (limited to those under age 30 or must qualify for hardship exemption)
- Student Health Insurance
What are ICHRA eligible medical expenses?
“Qualified medical expenses” are defined by the IRS in publication 502. If you’re familiar with Health Savings Accounts (HSAs), this is the same list. It includes things like doctor visits, co-pays, prescriptions, medical equipment, dental procedures, etc. Employers can choose to only reimburse certain types of medical expenses (ie, only prescriptions) as long as whatever elections are made are offered fairly to employees.
The wide range of eligible medical expenses with ICHRA is one of the pros when you consider ICHRA pros and cons.
ICHRA Eligible Expenses: the complete list
Abdominal supports • Abortion • Acupuncture • Air conditioner (when necessary for relief from difficulty in breathing) • Alcoholism treatment • Ambulance • Anesthetist • Arch supports • Artificial limbs • Autoette (when used for relief of sickness/disability) • Birth Control Pills (by prescription) • Blood tests • Blood transfusions • Braces • Cardiographs • Chiropractor • Christian Science Practitioner • Contact Lenses • Contraceptive devices (by prescription) • Convalescent home (for medical treatment only) • Crutches • Dental Treatment • Dental X-rays • Dentures • Dermatologist • Diagnostic fees • Diathermy • Drug addiction therapy • Drugs (prescription) • Elastic hosiery (prescription) • Eyeglasses • Fees paid to health institute prescribed by a doctor • Fluoridation unit • Guide dog • Gum treatment • Gynecologist • Healing services • Hearing aids and batteries • Hospital bills • Hydrotherapy • Insulin treatment • Lab tests • Lead paint removal • Legal fees • Lodging (away from home for outpatient care) • Metabolism tests • Neurologist • Nursing (including board and meals) • Obstetrician • Operating room costs • Ophthalmologist • Optician • Optometrist • Oral surgery • Organ transplant (including donor’s expenses) • Orthopedic shoes • Orthopedist • Osteopath • Oxygen and oxygen equipment • Pediatrician • Physician • Physiotherapist • Podiatrist • Postnatal treatments • Practical nurse for medical services • Prenatal care • Prescription medicines • Psychiatrist • Psychoanalyst • Psychologist • Psychotherapy • Radium Therapy • Registered nurse • Special school costs for the handicapped • Spinal fluid test • Splints • Sterilization • Surgeon • Telephone or TV equipment to assist the hard-of-hearing • Therapy equipment • Transportation expenses (relative to health care) • Ultra-violet ray treatment • Vaccines • Vasectomy • Vitamins (if prescribed) • Wheelchair • X-rays
Ineligible Over-the-Counter Drugs
Toiletries (including toothpaste) • Acne treatments • Lip balm (including Chapstick or Carmex) • Cosmetics (including face cream and moisturizer) • Suntan lotion • Medicated shampoos and soaps • Vitamins (daily) • Fiber supplements • Dietary supplements • Weight loss drugs for general well being • Herbs
Non-Deductible Medical Expenses
Advancement payment for services to be rendered next year • Athletic Club membership • Automobile insurance premium allocable to medical coverage • Boarding school fees • Bottled Water • Commuting expenses of a disabled person • Cosmetic surgery and procedures • Cosmetics, hygiene products and similar items • Funeral, cremation, or burial expenses • Health programs offered by resort hotels, health clubs, and gyms • Illegal operations and treatments • Illegally procured drugs • Maternity clothes • Non-prescription medication • Premiums for life insurance, income protection, disability, loss of limbs, sight or similar benefits • Scientology counseling • Social activities • Special foods and beverages • Specially designed car for the handicapped other than an autoette or special equipment • Stop-smoking programs • Swimming pool • Travel for general health improvement • Tuition and travel expenses a problem child to a particular school • Weight loss programs
If you’re pregnant, you might be excited to know you can get reimbursements for chiropractor and prenatal massage!
The CARES act brings exciting changes to HRAs and HSAs.
- Over the counter medications are now eligible without a letter from a doctor or prescription. That means your cold meds, cough syrup, allergy medicine and more can be reimbursed tax-free.
- Menstrual products like tampons, pads, liners, and cups are now classified as eligible expenses (as opposed to “hygiene”) to use with a tax-advantaged account.
Get started today!
Chat with our team with any questions you may have about these tax-friendly benefits or check out our ICHRA FAQ post or our comprehensive ICHRA Guide for more information on its background, setup process, requirements, and rules.
Additional resources →
This post was originally published in 2020 and has been updated with new information and insights for 2024.
