Benafica is a health benefits and insurance company that helps employers offer flexible, tax-free health reimbursement plans instead of traditional group health insurance.
ICHRA Contribution Strategies
Every ICHRA needs a contribution strategy. See how age-based and flat-dollar allowances compare, and which one fits your team.
Contribution Strategies
There are two common ways to structure what you contribute. Both are valid; the right one depends on the age spread and geography of your workforce.
Age-based contributions
This strategy ensures greater equity across your workforce.
- Set a target coverage level for your workforce (e.g. 75% of a Gold plan)
- Every employee gets the same purchasing power
- Dollar amounts differ by employee age and location (because insurance premiums vary by age and location)
Flat-dollar contributions
This strategy can be simpler to understand b, but it can disadvantage older employees and those living in areas ut it can disadvantage older employees and those living where insurance is more expensive.
- Set a flat dollar amount for all employees (e.g. $500)
- Each employee will receive the same dollar amount to buy health insurance
Age-Based Starts with a Benchmark Plan
The benchmark is the lowest-cost silver plan available in an employee’s local market. It sets the minimum needed to satisfy IRS affordability rules if you’re an applicable large employer. Everything else is built up from there.
A common step up — three-quarters of a mid-tier gold premium.
Think of this as a ceiling, not a guarantee. You're modeling the most you could spend at a given percentage. Actual spend usually lands lower, depending on enrollment and which plans employees choose.
What happens to money employees don't spend on premium?
Your last design decision: does unused allowance stay with the company, or can employees put it toward other qualified healthcare costs? Here’s how a leftover balance moves through each option.
Ready to Offer Better Benefits?
We’ll build a side-by-side comparison against your current plan using your actual census, so you can see the real numbers before you decide anything.