ICHRA Won’t Work For Us…..Our Employees Can’t Afford To Pay ICHRA Premiums Upfront!

“ICHRA Won’t Work For Us…..Our Employees Can’t Afford To Pay ICHRA Premiums Upfront!” We hear this a lot from employers who explore ICHRA as an alternative to their traditional group health plan.

So we asked AI ChatGPT “Can an employer issue pre-funded debit cards for ICHRA plan members?”

ChatGPT said:

Great question — and the short answer is:

✅ Yes, employers can issue pre-funded debit cards for ICHRA plan members — but only if it’s done the right way.

💳 Here’s how it works:

  1. The card must be tied to the ICHRA plan and can only be used for eligible expenses (e.g. premiums, medical expenses depending on plan design).
  2. The card must be set up to restrict purchases to IRS-approved medical expense categories (per IRC Section 213(d)).
  3. It must be administered by a compliant third-party administrator (TPA) to meet IRS substantiation rules.

❗What you can’t do:

  • Just hand out Visa gift cards or general pre-paid debit cards.
    That would violate IRS rules and could make the reimbursements taxable.

✅ What you can do:

  • Use a compliant ICHRA debit card through platforms like:
    • Take Command Health
    • PeopleKeep
    • HealthEquity
    • WEX
  • These cards typically:
    • Auto-substantiate certain transactions.
    • Are limited to eligible merchants.
    • Integrate with the reimbursement platform.

🚦Bottom Line:

Yes — as long as it’s a regulated, plan-specific debit card administered properly. It makes reimbursements easier and faster for employees, while keeping the plan compliant.

Here’s a comparison of top ICHRA administrators that offer pre-funded debit card options, helping streamline reimbursements for employees:

1. Remodel Health

  • Debit Card: Offers the Remodel Health Mastercard® Debit Card, issued by Bangor Savings Bank.
  • Features:
    • Allows employees to pay for eligible medical expenses directly.
    • Provides comprehensive support, including custom plan design and employee onboarding.
    • Offers detailed payroll and reimbursement reports.
  • Ideal For: Mid-sized to large employers seeking a full-service ICHRA solution with robust support. ​Remodel Health+1PeopleKeep HRA Software+1PeopleKeep HRA Software+1Take Command+1

2. Take Command Health

  • Debit Card: Provides a compliant ICHRA debit card integrated with their platform.
  • Features:
    • Simplifies the reimbursement process with auto-substantiation for eligible expenses.
    • Offers an intuitive admin portal for plan management.
    • Provides employee support for plan selection and onboarding.
  • Ideal For: Small to mid-sized businesses looking for an easy-to-use platform with strong customer support. ​

3. PeopleKeep

  • Debit Card: While PeopleKeep doesn’t offer a physical debit card, their platform facilitates reimbursements for eligible expenses.
  • Features:
    • User-friendly software for managing reimbursements.
    • Provides compliance support and documentation management.
    • Offers personalized employee benefits solutions.
  • Ideal For: Small employers seeking a straightforward reimbursement process without the need for a physical debit card. ​