ICHRA & benefits design
Ray's four most expensive employees don't even use the benefit
How separating employee classes changes the compliance calculation.
Here are the 10 employees at Ray’s call center.
Bigger circles are older — on the individual market, age is the primary cost driver.
Ray’s ten employees are shown in a single row with their ages, from Maria at 28 to Robert at 64. The older employees — James, Tom, Linda, Robert, and Susan — are drawn as larger discs.
Only Maria, Jason, Kevin, and Priya enroll.
The other six opted out. But for compliance, the government counts all ten when calculating Ray’s minimum contribution.
The same ten employees, now labelled by what they did with the benefit: Maria, Jason, Kevin, and Priya enrolled, and the remaining six waived. All ten are still inside the compliance calculation.
All 10 counted for compliance
The largest circles aren’t using the benefit. They’re all part-time.
Tom, Linda, Robert, and Susan — ages 58 to 64 — are pulling up what Ray owes for everyone. ICHRA lets him put them in a separate class.
The ten employees are split into two groups: a full-time class of six, and a separate part-time group holding Tom, Linda, Robert, and Susan, the four oldest and the four driving the required contribution up.
Full-time class
6 employees · oldest is 52
Part-time · separate class
Ages 58 to 64 · none enrolled
Once Ray separates them, his required contribution drops.
Nothing changed about what the enrolled employees receive. Ray just stopped letting a group he isn’t required to cover inflate the math.
Only the full-time class is left in the calculation. The oldest counted employee falls from 64 to 52, and the minimum monthly contribution falls from $4,430 across ten people to $2,172 across six.
Full-time class
The only class Ray has to fund
Before
- Counted
- 10 employees
- Oldest counted
- age 64
- Minimum contribution
- $4,430/mo
After
- Counted
- 6 full-timers
- Oldest counted
- age 52
- Minimum contribution
- $2,172/mo