ICHRA Employee Classes: Rules, Minimum Sizes & Design

Direct answer

ICHRA employee classes let an employer offer the arrangement to defined groups of employees or combine ICHRA with a traditional group plan across separate permitted classes. The employer must use classes allowed by the federal rules, apply the same terms within a class subject to limited age and dependent variations, and follow minimum class-size rules when they apply.

Why classes exist

Employee classes create a controlled way to reflect legitimate workforce differences without allowing an employer to steer individual high-cost employees away from a group plan. A class is a rules-based category, not a list of employees selected because of health status, expected claims, or personal preference. ^{source source}

Permitted class concepts

Federal guidance identifies classes based on job status and objective employment characteristics. Common examples include full-time, part-time, seasonal, salaried, non-salaried, employees covered by a collective bargaining agreement, employees who have not satisfied a waiting period, certain nonresident aliens with no U.S.-based income, and employees whose primary work locations fall within defined geographic areas. Permitted classes can be combined. Employers should use the complete regulatory list and qualified counsel when designing a nonstandard structure. ^source

Employment statusFull-time, part-time, or seasonal.

Compensation basisSalaried or non-salaried.

Bargaining statusEmployees covered by a particular collective bargaining agreement.

Waiting periodEmployees who have not yet satisfied a permitted waiting period.

Work locationEmployees whose primary sites of employment are in a permitted geographic area.

Combined classA combination of two or more permitted class criteria.

Same terms within a class

Employees in the same class generally must receive the ICHRA on the same terms. The employer can vary the amount based on age, subject to a maximum 3:1 ratio, and based on the number of dependents. Those variations should be written into the plan design and applied consistently. ^source

“Same terms” does not mean every employee receives the same dollar amount in all cases. It means the plan's eligibility and contribution rules operate consistently for everyone who shares the same class and relevant age or family tier.

Using ICHRA with a group plan

An employer can offer a traditional group health plan to one permitted class and an ICHRA to another. It cannot offer employees in the same class a choice between the group plan and ICHRA. This boundary is central: classes divide benefit models; they are not a menu from which each employee selects the employer arrangement they prefer. ^source

When both benefit models are offered, minimum class-size requirements may apply to certain classes receiving ICHRA:

Employer size	Potential minimum class size	Important boundary
Fewer than 100 employees	10 employees	These minimums generally matter when the employer offers a traditional group plan to some employees and ICHRA to others. If no traditional group plan is offered to any employees, these minimums do not apply.
100–200 employees	10% of total employees
More than 200 employees	20 employees

Waiting periods and new hires

Employers can use a permitted waiting-period class and federal rules include special treatment for new hires. Operationally, the design must line up with eligibility dates, notice timing, individual-market special enrollment, payroll effective dates, and the date reimbursements can begin. A technically valid class can still fail if a newly eligible employee cannot obtain coverage in time.

How to design classes from first principles

Identify the business difference. Is the issue geography, worker status, bargaining agreement, or another permitted employment characteristic?
Confirm the class is permitted. Do not invent a class because it produces the desired economic result.
Test anti-selection risk. The design should not isolate individuals based on health, claims, age outside permitted variation, or expected cost.
Apply minimum-size rules. Determine whether a traditional group plan remains available to another class.
Model affordability by class. Different locations and age distributions can require different contributions.
Document the rule. Eligibility systems, payroll, notices, and the administrator must all use the same class definition.

Common class-design failures

Creating a “high-cost employee” classHealth status and expected claims are not permitted class criteria.

Offering group or ICHRA choice within one classThe employer must choose the benefit model for the class.

Ignoring headcount minimumsHybrid group-plan/ICHRA designs may trigger class-size requirements.

Using inconsistent HR dataA class definition that payroll, HRIS, and the administrator interpret differently creates eligibility errors.

Designing without employee-market analysisA geographically valid class may still face weak individual plan options.

Frequently asked questions

Can an employer create any employee class it wants?

No. The class must be based on a category permitted by the federal ICHRA rules.

Can full-time employees get a group plan while part-time employees get ICHRA?

Yes, that is a common example of using separate permitted classes, subject to the applicable rules and minimum class sizes.

Can employees in the same class receive different amounts?

The plan may vary contributions by age within a 3:1 ratio and by number of dependents. Other differences require careful regulatory review.

Do minimum class sizes always apply?

No. HealthCare.gov states that the minimums do not apply when the employer does not offer a traditional group health plan to any employees.

Sources and evidence

HealthCare.gov — Individual Coverage Health Reimbursement ArrangementsFederal overview of ICHRA contributions, employee classes, class-size minimums, affordability, and implementation timing.Source reviewed 2026-09-11

Internal Revenue Service — Internal Revenue Bulletin 2019-28 — HRA integration final rulesPrimary regulatory text for ICHRA notice timing, individual-coverage substantiation, classes, and opt-out rules.Source reviewed 2026-08-16

Review dates are recorded for each source above. Company pages are useful for confirming how a product is described, but they do not prove service quality or customer results.