Compliant ICHRA Contributions for Spouse & Child Dependents

Executive Summary 

• ✅ Employers may increase ICHRA amounts when employees enroll spouses or children. 

• ❌ Employers may NOT vary contribution amounts based on the age of the spouse or child. 

• ✅ If contributions vary by age, the variation must be based on the age of the employee only. 

• ❌ A 35-year-old employee with a 60-year-old spouse cannot receive a higher employer contribution because of the spouse’s age. 

• ✅ All employees of the same age within the same class must be offered the same maximum HRA amount (subject to permitted variations like family size). 

This framework is established under the 2019 Final Rules on Health Reimbursement Arrangements (HRAs) issued jointly by Treasury, IRS, DOL, and HHS. 

Primary Regulatory Authority 

2019 Final HRA Regulations (ICHRA Rule) 

Internal Revenue Service 
U.S. Department of the Treasury 
U.S. Department of Labor 
U.S. Department of Health and Human Services 

Federal Register Citation: 
Health Reimbursement Arrangements and Other Account-Based Group Health Plans 
84 Fed. Reg. 28888 (June 20, 2019) 

Direct link: 
https://www.federalregister.gov/documents/2019/06/20/2019-12571/health-reimbursement-arrangements-and-other-account-based-group-health-plans 

What the Rule Says 

The final regulations clarify that: 

An employer may vary ICHRA contributions based on age only if the variation is determined using the age of the employee. 

The rule specifically ties permissible age variation to: 

• The employee’s age 

• The ACA individual market age-rating curve (3:1 maximum) 

It does not permit: 

• Using the spouse’s age 

• Using a child’s age 

• Using an average family age 
• Using dependent-specific age rating 

Treasury/IRS Regulatory Text (26 CFR § 54.9802-4) 

Direct eCFR link: 
https://www.ecfr.gov/current/title-26/section-54.9802-4 

This section governs HRA integration with individual coverage. 

Key Compliance Principle 

If contributions vary by age: 

• The maximum dollar amount available to all employees of the same age and class must be the same. 

• Age variation must be determined by reference to the age of the employee, not dependents. 

• Variations must align with the ACA’s permissible 3:1 individual market age curve. 

There is no regulatory allowance to increase employer contributions because a dependent is older. 

CMS & HHS Guidance 

Centers for Medicare & Medicaid Services 

CMS oversees Marketplace operations but does not have authority to override the joint Treasury/IRS/DOL final rule governing employer HRA structure. 

CMS has received industry requests to allow dependent-age rating for ICHRA contribution purposes; however: 

• As of current federal guidance, no regulatory amendment has been issued. 
• Dependent-age-based employer contribution scaling remains not permitted. 

What Employers ARE Allowed to Do 

Employers may vary ICHRA contributions based on: 

1. Employee Class

Examples: 

• Full-time vs part-time 

• Salaried vs hourly 

• Geographic location 

• Seasonal employees 

• Union vs non-union 

(Subject to class size minimum rules) 

 

1. Employee Age

Using ACA age bands. 

Example: 

• 25-year-old employee → $400/month 

• 55-year-old employee → $700/month 

All 55-year-old employees in the same class must be offered the same amount. 

 

1. Family Size (Flat Tiering)

Employers may increase contribution amounts when dependents are enrolled: 

Example: 

• Employee only → $500 

• Employee + spouse → $800 

• Employee + children → $850 

• Family → $1,000 

But these increases must not be calculated based on dependent age. 

The contribution delta for “spouse” must be the same regardless of whether the spouse is age 30 or 64. 

 

What Employers CANNOT Do 

❌ Increase ICHRA contribution because the spouse is older 
❌ Apply separate age curves for dependents 
❌ Use composite family age calculations 
❌ Apply ACA individual premium rating logic to employer funding levels 

Even though individual market premiums vary by each covered member’s age, employer HRA funding may not mirror that dependent-specific premium variation. 

Why the Rule Exists 

The agencies designed this restriction to ensure: 

• Non-discrimination among similarly situated employees 

• Predictability of employer contributions 

• Alignment with ACA employer mandate affordability rules 

• Avoidance of backdoor discrimination via family-age pricing 

The core compliance concept: 

Employees of the same age and class must have access to the same maximum ICHRA amount. 

Dependent age breaks that symmetry. 

Interaction with ACA Employer Mandate Affordability 

Internal Revenue Service 

For Applicable Large Employers (ALEs): 

• Affordability testing under §4980H is measured based on the employee’s required contribution for self-only coverage. 

• Because affordability is employee-based, the regulatory framework is structured around employee age—not dependent age. 

This further supports why dependent-age funding is not currently permitted. 

 

Practical Compliance Summary for Employers 

Question	Compliant?
Increase funding when spouse added?	✅ Yes
Increase funding based on spouse age?	❌ No
Increase funding when children added?	✅ Yes
Increase funding based on child age?	❌ No
Vary by employee age?	✅ Yes
Use ACA 3:1 age curve tied to employee age?	✅ Yes

 

Compliance Statement  

Under current federal ICHRA regulations (84 Fed. Reg. 28888; 26 CFR § 54.9802-4), employers may vary ICHRA contributions by employee age and family size, but not by the age of dependents. All employees of the same age within the same class must be offered the same maximum HRA amount. Contributions may increase when spouses or children are covered; however, the increase must be uniform and may not be calculated based on the dependent’s age. 

Appendix – Direct Regulatory Language on ICHRA Age-Based Contribution Rules 

1. 84 Fed. Reg. 28888 (June 20, 2019)

Source Link: 

Health Reimbursement Arrangements and Other Account-Based Group Health Plans – Final Rule 

Quoted Language (Age Variation): 

"The maximum dollar amount made available to participants may increase as the participant’s age increases, provided that the increase is made available on the same terms to all participants who are the same age." 

"Any variation in the maximum dollar amount made available based on age must be determined by reference to the age of the participant (employee) and must comply with the applicable age rating limits under section 2701 of the Public Health Service Act." 

1. 26 CFR § 54.9802-4

Source Link: 

26 CFR §54.9802-4 – Individual Coverage HRA Integration Requirements 

Quoted Language (Uniformity Requirement): 

"The maximum dollar amount made available to participants within a class of employees may vary in accordance with the variation in the cost of individual health insurance coverage based on the participant’s age." 

"The maximum dollar amount made available to participants who are the same age and in the same class of employees must be the same." 

1. Public Health Service Act §2701 (ACA Age Rating)

Source Link: 

CMS – Age Rating and Market Reform Guidance 

Quoted Principle: 

"With respect to the premium rate charged by a health insurance issuer... such rate shall not vary by more than 3 to 1 for adults (age rating limitation)." 

This statutory age-rating framework is incorporated by reference into the ICHRA age variation rules and applies to the employee’s age—not dependent age.