Does COBRA apply to my ICHRA benefits?

Short answer: In certain cases (namely if your former employer has more than 20 employees, or depending on the state you're located in), COBRA could apply. But due to how it works with an ICHRA, we've never seen an employee opt into it.

The reason is simple: if you elect COBRA for your ICHRA, you may be responsible for paying both the cost of your individual health insurance premium and the cost of maintaining the HRA (such as the platform fee or PEPM). Since you'd already be paying the full premium yourself, it's not practical. COBRA was designed to make sure you still have access to the plan offered by your previous employer — which you already get by default with ICHRA.

Two things to keep separate

The individual health insurance policy

You shop for, select, and own your individual health insurance plan. When your employment ends, the policy does not automatically terminate. You can:

• Continue the policy by paying the insurance carrier directly.
• Cancel the policy if you no longer want coverage.

Once your employment ends, you simply stop receiving your employer's ICHRA allowance.

Note: StretchDollar contacts you after your employment ends to explain your options for your current coverage — how to keep it active (if you want to) and whether a change in income may make you eligible for premium tax credits.

The ICHRA (the reimbursement benefit)

The ICHRA is the employer-funded reimbursement arrangement. While COBRA rules can apply to an ICHRA in certain situations, electing COBRA is typically impractical because you'd have to pay the full cost of your individual health insurance premium plus the cost of continuing the HRA benefit.

What typically happens

When your employment ends on the StretchDollar platform:

• Your employer deactivates your account, and your ICHRA allowance stops as of your termination date. (See this article for more details.)
• StretchDollar contacts you to explain your coverage options.
• Your individual health insurance policy remains active unless you choose to cancel it directly with your insurance carrier. StretchDollar doesn't cancel the policy on your behalf.

Questions about your specific situation? Reach out to StretchDollar Broker support.