HRA Solutions for ACA Compliance in 2025: Leveraging ICHRA

Keeping up with healthcare regulations may not be glamorous, but it’s essential if you’re an employer looking to avoid costly penalties. 2025 marks the 15th anniversary of the Affordable Care Act (ACA), a historic achievement in United States (U.S.) healthcare reform, and with that milestone comes updated requirements that every employer needs to know. If you're exploring affordable, flexible ways to meet ACA mandates without ballooning your benefits budget, Health Reimbursement Arrangements (HRAs) might be the answer.

In this article, we’ll break down the ACA requirements for employers in 2025, explore how HRA solutions like Individual Coverage HRA (ICHRA) can help you stay compliant, and discuss how Vitable makes it easy to offer affordable, ACA-compliant coverage.

Understanding the ACA and What’s Required in 2025

The Affordable Care Act is a U.S. healthcare reform law that was designed to expand access to quality, affordable healthcare, and it has delivered on that promise. Since its passage in 2010, the ACA has helped reduce the number of uninsured individuals by over 20 million. As of 2025, more than 24.2 million Americans have enrolled in Marketplace coverage, and the U.S. is seeing the lowest uninsured rates in its history.

One of the ACA’s biggest impacts was making employer-sponsored health benefits more accessible for working Americans, especially hourly workers, who are often left behind by traditional insurance models. By offering subsidies to those earning up to 400% of the federal poverty line (FPL) and expanding Medicaid to include more low-income adults, the ACA reshaped how coverage is delivered across industries.

It also introduced new responsibilities for businesses. Employers meeting certain size thresholds are required to offer affordable, accessible health benefits or face significant penalties. In the sections below, we’ll break down who is responsible for meeting these mandates and what is required in 2025.

Who Needs to Comply? Understanding Applicable Large Employers (ALEs)

Businesses that employed an average of 50 or more full-time employees (or businesses that employed mix of full-time and part-time employees whose hours worked adds up to 50 “full-time equivalents”) in the previous calendar year qualify as Applicable Large Employers (ALEs). These employers must comply with ACA mandates or risk substantial financial penalties.

ALEs include:

• Full-time workers clocking 30+ hours per week
• Part-time employees, whose hours are combined to calculate full-time equivalents (FTEs)

ACA Employer Requirements for 2025

If you're an ALE, here’s what the ACA requires from your business in 2025:

• Offer Minimum Essential Coverage (MEC): You must offer MEC to at least 95% of full-time employees and their dependents, and that coverage must also meet minimum value (MV) standards. Learn more about MEC here.
• Ensure Affordability: The plan must be affordable according to IRS guidelines to avoid the "Schedule B Penalty." For 2025, affordable coverage means the lowest-cost self-only MEC plan cannot exceed 9.02% of the employee’s household income.
• File IRS Forms 1094-C and 1095-C: ALEs must submit Forms 1094-C and 1095**-**C to report whether they offered affordable MEC plans with minimum value to their full-time employees.

Failing to meet these requirements could result in significant financial penalties of up to $7,250 per employee, so aligning your benefits strategy with ACA compliance is critical. That’s why aligning your benefits strategy with ACA regulations, through solutions like ICHRA, is key.

HRA Plans That Help You Stay ACA-Compliant

An HRA (Health Reimbursement Arrangement) is a tax-advantaged benefit that allows employers to reimburse employees for qualified healthcare expenses, including health insurance premiums. HRAs are one of the most flexible and cost-effective ways for businesses to meet ACA requirements, while also giving employees more choice and control over their healthcare.

The HRA option for 2025 ACA compliance is the Individual Coverage HRA (ICHRA), which is available to businesses of any size and can be tailored to different employee groups. With an ICHRA, employers provide a set monthly allowance, and employees use those funds to purchase their own individual health insurance plans, typically through the ACA Marketplace or a private exchange.

What makes the ICHRA so attractive is its customizability and scalability. Employers can vary reimbursement amounts by employee class (such as full-time vs. part-time, salaried vs. hourly, or by location), and there are no annual contribution limits. As long as the plan design meets MEC and affordability standards, the ICHRA can fully satisfy ACA employer mandates.

For employers seeking flexibility and predictability in their healthcare spending—without sacrificing compliance—ICHRA is a smart solution.

How ICHRA Meets ACA Affordability Standards

As mentioned above, to satisfy the ACA employer mandate, an ICHRA plan must be designed to offer coverage that is affordable and fulfills the MEC and minimum value standards. Let’s break this down.

Affordability

For 2025, the ACA defines affordable coverage as a plan that costs the employee no more than 9.02% of their household income for the lowest-cost silver-level Marketplace plan available in their area (for self-only coverage). Since most employers don’t have access to household income data, it can make it challenging for the employer to understand what is affordable to the employee. To circumvent this, the IRS allows the use of safe harbors to determine affordability.

These safe harbors include:

• W-2 wages
• Rate of pay
• Federal Poverty Line (FPL)
• Employee’s geographic location (to determine the local Marketplace plan costs)
• Look-back method (using prior year’s plan prices)

By subtracting your ICHRA allowance from the lowest-cost silver plan premium, you can determine whether the remaining cost is below the 9.02% threshold. If it is, your ICHRA is considered affordable.

Minimum Value:

The second part of determining if an ICHRA is ACA-compliant is meeting the minimum value requirement. The employee’s selected plan must also meet the minimum value standard, meaning it covers at least 60% of expected healthcare costs and includes substantial physician and inpatient hospital services. Most major medical plans purchased through the ACA Marketplace meet this requirement; however, some plans do not, including short-term health plans, healthcare sharing ministries, and TRICARE. These plans aren’t eligible for reimbursement under an ICHRA.

The good news is that if your employee is enrolled in a non-qualifying plan, the introduction of an ICHRA qualifies them for a Special Enrollment Period. That allows them to shop for a qualified plan that meets both MEC and minimum value standards.

But you don’t have to worry about navigating these details—Vitable handles it all for you. From affordability calculations to employee education and enrollment support, we ensure your ICHRA is designed to meet ACA requirements and deliver real value to your team.

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