A guide for employers and employees on how individual coverage works through Warp.

Warp has partnered with Thatch to offer an ICHRA. It's a flexible alternative to a traditional group health plan. Instead of picking one plan for the whole team, your company sets a monthly budget and each employee picks the individual plan that works best for them. This article covers what an ICHRA is, how it's different from a small group plan, what you and your team should know, and how the setup works through Warp and Thatch.

What is an ICHRA?

ICHRA stands for Individual Coverage Health Reimbursement Arrangement. It's an employer-funded benefit that reimburses employees, tax-free, for individual health insurance they buy on their own. Instead of choosing one group plan for everyone, the employer decides on a monthly allowance, and each employee puts that allowance toward a plan they pick from the individual market.

ICHRAs became available under a federal rule in 2020, and any size company can offer one, including owner-only businesses. There are no minimum or maximum contribution limits, so you can set the budget that fits your team and your costs.

Who can participate in an ICHRA?

Most employees can participate, but whether business owners can take part comes down to how the business is taxed. This matters for founders and any family members on payroll, so it's worth checking before you set up your plan.

Owners who are not eligible. If the business is taxed as an S-Corp, a partnership, a sole proprietorship, or an LLC taxed as one of those, an owner with more than 2% of the legal entity counts as self-employed and can't participate in the ICHRA. The same goes for that owner's spouse, dependents, and family members, even if they're on payroll as employees.

Owners who are eligible. If the business is a C-Corporation, or an LLC that elects C-Corp taxation, owners are treated as employees and can participate, with no ownership-based restrictions. Family members can take part too, as long as they're employees.

If you're not sure how your business is taxed or whether an owner qualifies, reach out at benefits@warp.co and we'll help you confirm before you enroll.

How an ICHRA is different from an ACA small group plan

• Who picks the plan. On a small group plan, the employer chooses one or a few plans and the team enrolls in those. With an ICHRA, each employee picks their own plan, so they can choose one their doctors take.

• How cost works. A small group plan has one premium structure the employer and employees share. An ICHRA gives each employee a fixed monthly allowance, so the employer's cost is predictable and capped at the budget they set.

• Who can offer it. Small group plans usually require a minimum number of W-2 employees who aren't owners, plus at least two weeks of payroll history. An ICHRA has no group-size minimum.

• Portability. Since the employee owns their plan, they can often keep it through a job change or life event, which isn't possible with a group plan.

• Enrollment timing. Starting an ICHRA can open a special enrollment period for employees, so you're not limited to the standard open enrollment window.

Is an ICHRA more cost-competitive than a group plan for us?

It depends a lot on where your team is. Individual-market premiums vary by state and county, and in many areas an ICHRA beats a small group plan on cost. Take Command publishes an interactive map showing where that's the case: see the ICHRA cost-competitiveness map.

Talk to us about whether an ICHRA meets affordability for your situation. ICHRA affordability ties into ACA rules and depends on your allowance amounts, where your employees live, and your team makeup. Our benefits team will walk through this with you before you decide. Reach out at benefits@warp.co.

What employers and employees should know

For employers

• You set the budget. You decide the monthly allowance, and you can vary it by employee class, for example by location or full-time versus part-time. Your cost stays predictable.

• Allowances are tax-advantaged. Reimbursements through an ICHRA are tax-free to employees, and your contributions are generally tax-deductible.

• Unused funds stay with the company. An ICHRA reimburses costs rather than pre-funding an employee-owned account, so allowance an employee doesn't use isn't money you've permanently given away.

• Less admin than a group plan. There's no group renewal or re-underwriting cycle to manage. Thatch handles plan shopping and enrollment for your employees, and Warp manages the benefit alongside your payroll.

For employees

• You choose your own plan. You shop health, dental, and vision plans from major carriers on Thatch and pick the one that fits your needs and your doctors.

• Your allowance is tax-free. The monthly amount your employer sets goes toward your plan tax-free.

• Leftover allowance doesn't go to waste. If the plan you choose costs less than your allowance, the rest is available to you for qualified medical expenses. There's more on how that works below.

• Your plan can travel with you. Because the plan is yours, it can give you more continuity through a job change or life event than a group plan would.

How allowance versus plan cost works through Warp and Thatch

When an employee picks a plan, Thatch compares its cost to that employee's monthly allowance. One of two things happens:

1. The plan costs less than the allowance. The leftover amount is made available to the employee on their Thatch card to spend on qualified medical expenses like copays and prescriptions. The employee still gets the full value of the allowance.

2. The plan costs more than the allowance. The difference is the employee's responsibility and gets collected through a Warp payroll deduction, so it comes out of payroll instead of the employee paying separately out of pocket.

If a deduction needs to be entered by hand, follow Thatch's guide: Managing payroll deductions manually in Thatch.

Adding new hires

New hires need to be added to Thatch by hand. A new employee won't flow into Thatch on their own, so they need to be added there to get their allowance and enrollment set up. If you're not sure how to add someone or you'd rather we handle it, reach out and we'll take care of it.

Frequently asked questions

I don't see Warp as a payroll option in Thatch.

That's expected. Thatch works with any payroll provider and doesn't need a direct integration with Warp, so you won't see Warp listed as a connected payroll option. Deductions are handled manually instead of through an automatic sync. Follow Thatch's manual deductions setup guide, and email benefits@warp.co if you'd like us to confirm the amounts or set it up with you.

My health insurance election email expired and I can no longer waive or accept. Can you help?

Yes, and there's nothing you need to do other than let us know. Enrollment links time out sometimes, but that doesn't mean you've missed your chance to enroll or waive. Email benefits@warp.co and we'll re-send your election so you can finish it. If you're close to a coverage deadline, mention that and we'll prioritize it.

Can business owners use the ICHRA?

It depends on how the business is taxed. If it's a C-Corporation, or an LLC that elects C-Corp taxation, owners are treated as employees and can participate. If it's taxed as an S-Corp, partnership, sole proprietorship, or an LLC taxed as one of those, an owner with more than 2% of the entity is considered self-employed and can't participate, and neither can that owner's spouse, dependents, or family members on payroll. If you're unsure where you land, email benefits@warp.co and we'll confirm it with you.

Can I switch to an ICHRA outside of open enrollment?

Usually, yes. Starting a new ICHRA generally opens a special enrollment period that lets employees enroll in an individual plan outside the standard window. We'll confirm the timing for your situation.

What can I spend leftover allowance on?

Leftover allowance is for qualified medical expenses, like copays, prescriptions, and other eligible health costs. It can't be taken as cash. If you're not sure whether something qualifies, ask us before you spend.

What happens to my coverage if I leave the company?

Because your plan is yours, you can often keep it after you leave, though your Warp and Thatch allowance ends with your employment. Reach out and we'll walk you through your options.

Who do I contact for help?

For anything to do with your benefits, whether it's enrollment, allowances, deductions, or plan questions, email benefits@warp.co. We manage your benefits start to finish and are glad to help.