ICHRA Eligible Expenses in 2025

Looking into offering an Individual Coverage Health Reimbursement Arrangement (ICHRA) in 2025? Or already enrolled and want to get the most from your plan? Let’s break down what’s covered, what’s not, and how Vitable helps make it easier than ever to access care that actually works for you and your employees.

While Individual Coverage HRAs (ICHRAs) are still relatively new, they’re quickly becoming a favorite among forward-thinking employers—and for good reason. They're flexible, user-friendly, and offer big tax advantages for everyone involved.

In this article, we’ll help you understand which medical expenses are eligible for reimbursement under an ICHRA and what’s not, so you and your employees can take full advantage of your health reimbursement arrangement (HRA) plan.

What is an Individual Coverage HRA?

An Individual Coverage HRA (ICHRA) is a health benefit that allows employers to reimburse employees for health insurance, rather than selecting and managing a group plan for them. An ICHRA gives employers the power to customize their offering by deciding what types of expenses they want to reimburse, including:

• Health Insurance Premiums Only (Note: Premiums for a spouse’s employer-sponsored plan are not eligible for reimbursement.)

• Health Insurance Premiums + Qualified Medical Expenses (This option gives employees the most flexibility but can make budgeting slightly less predictable.)

Whether you choose to cover just premiums or premiums and a mix of medical expenses, the key advantage remains the same: reimbursements are completely tax-free for both the employer and the employee. That means no income tax, no payroll tax, and no employer tax liability.

ICHRA-Eligible Plans Include:

Employees must be enrolled in a qualifying individual health plan to participate in an ICHRA.

These can include:

• Marketplace major medical plans (Bronze, Silver, or Gold tiers)
• Catastrophic health plans (available to those under 30 or individuals who qualify for a hardship exemption)
• Medicare (Parts A and B, or Part C)
• Student health insurance plans

What Medical Expenses Are Eligible for Reimbursement Under an ICHRA?

The IRS has outlined all ICHRA-eligible medical expenses, also referred to as “qualified medical expenses,” in Publication 502. Eligible expenses for ICHRA are the same as those for Health Savings Accounts (HSAs). That list will be your go-to reference for what’s covered: routine doctor visits, prescription medications, diagnostic tests, mental health care, dental work, and even durable medical equipment like crutches or hearing aids.

Employers can decide whether to cover all eligible medical expenses or just specific categories, such as prescriptions or preventive care. The key is consistency: whatever you choose must be offered fairly across your team. One of the major advantages of ICHRA is the built-in flexibility. By offering reimbursements for such a broad range of medical costs, ICHRAs give employees more control over how they use their benefits, and give employers the ability to tailor offerings in a way that aligns with their bottom line.

ICHRA Eligible Expenses: What’s Covered

One of the best parts of an ICHRA is just how wide the coverage can be. When employers choose to reimburse for qualified medical expenses, employees can use their benefits toward hundreds of healthcare costs—not just premiums or co-pays. From preventive care to mental health to medical devices, the eligible list is long and incredibly useful.

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