If you're a business owner (like an S-corp shareholder, partner, or LLC member), or are otherwise ineligible to participate in your company’s ICHRA, your health benefits work a little differently on Thatch. Here's what you need to know.
Why your experience is different
Under IRS rules, certain individuals aren't eligible to participate in an Individual Coverage Health Reimbursement Arrangement (ICHRA). This includes:
2%+ owners of S Corps, partners in Partnerships, and certain LLC members
Family members of the above
Contractors
This doesn't mean you can't get health insurance through Thatch. It just means the treatment of your insurance premium payments is different from your ICHRA-eligible coworkers, and the times at which you can sign up might be different.
How it works
You can browse and select a health plan and will have access to plan browsing tools and can connect with a licensed advisor if you want help choosing. However you MUST have recently experienced a Qualified Life Event (QLE, including events like moving house, getting married, or the birth of a new child) to be eligible to choose a plan on Thatch. If you do not have a QLE, you will need to wait until Open Enrollment in November to choose a plan for next year.
Your employer will determine whether, and how, your premiums will be deducted from your paycheck. You’ll want to confirm with them how they have set this up for you.
You won't see an ICHRA allowance. Since you're not participating in the ICHRA, there's no allowance or reimbursement in your dashboard. Your employer is facilitating the payment of your health insurance premium, not providing an ICHRA benefit.
What this means for your taxes
We can't provide tax advice, but your tax advisor or CPA can help you understand what deductions you may be able to claim on your personal tax return. Many business owners in this situation are eligible for a self-employed health insurance deduction. Your CPA will know the details.
FAQ
Why can't I participate in the ICHRA like my coworkers? IRS rules treat certain business owners and other ineligible individuals differently from regular employees when it comes to employer-sponsored health benefits. If you have questions about why this applies to you, your tax advisor can explain the specifics.
Is my coverage any different? No. You have access to the same plans and the same Thatch platform as your ICHRA-eligible coworkers. The only difference is how your premium is treated for tax purposes.
Who's paying for my coverage? That depends on how your employer has set things up. Your employer or HR team can clarify how it works at your company.
Can I switch to pre-tax deductions? Under IRS guidelines, business owners who aren't ICHRA-eligible can't receive pre-tax health benefits through a Section 125 cafeteria plan. If you have questions about your specific situation, check with your tax advisor.
What if I'm not actually a business owner? If you think you've been flagged incorrectly, let your employer know. They can update your status in Thatch, or reach out to support@thatch.com for help.
Who can I contact with questions? For questions about how Thatch works, contact support@thatch.com. For questions about your tax situation, reach out to your tax advisor or CPA.