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Thatch makes it simple to offer competitive health benefits without the complexity of traditional group plans. You set a monthly health budget for employees, and your employees choose the individual health plan that works best for them.

Docs for Thatch employers

These are the docs for Thatch employers: businesses that provide employee health benefits through Thatch. If you receive health benefits from your employer through Thatch, see members. If you integrate Thatch into your product, see platforms.

How Thatch works

1. You set an employee health budget — Allocate pre-tax funds to your employees instead of prepaying for underutilized benefits.
2. Each employee enrolls in a health plan — Employees get to choose the health plan that works best for them.
3. Employees use leftover budget for eligible health expenses — If your benefits budget allows, employees can spend their remaining balance on the things that fit their lives. Thatch provides additional options in the Thatch Market.
4. Thatch supports your team — Thatch submits enrollments, makes payments, generates compliance reporting, and answers member questions directly, reducing complexity for HR teams.

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C Corporations, B Corporations, S Corporations, Partnerships, and LLCs are all eligible to offer an ICHRA. In the case of S Corporations, Partnerships, and LLCs electing pass-through taxation, the employer entity can offer the pre-tax health budget to employees who aren't owners of the entity (owners are defined as anyone owning more than 2% of the entity).

You set an employee health budget

With Thatch, you give employees a monthly pre-tax health budget to spend on individual health insurance and other health purchases. This program is called an Individual Coverage Health Reimbursement ArrangementIndividual Coverage Health Reimbursement Arrangement An employer-funded arrangement that reimburses employees tax-free for individual health insurance premiums and qualified medical expenses, instead of the employer offering a group health plan. Also called a CHOICE Arrangement., or ICHRA.

tip

ICHRAs are also called CHOICE ArrangementsCHOICE Arrangement Another name for an ICHRA. Thatch documentation uses ICHRA, but you may see the same benefit called a CHOICE Arrangement elsewhere..

Instead of picking one group plan for everyone, you set the budget and your employees each choose the plan that fits their needs. They get more choice; you get predictable, controlled costs.

You	Your employees	Thatch
Set monthly health budget per employee	Choose their own individual health plans	Administers the ICHRA
Decide which benefits are eligible to be covered by the health budget	Use their health budget toward premiumspremium The monthly amount paid to maintain health insurance coverage, regardless of whether any services are used that month. and eligible expenses	Enrolls employees, and coordinates payments and reimbursements
Invite and manage your team	Get reimbursed for qualifying costs	Provides employee support and guidance

warning

If you have employees aged 65 or older, they should apply for Medicare Parts A and B as soon as possible, before you invite them to Thatch. They cannot use their health budget on their Medicare premiumspremium The monthly amount paid to maintain health insurance coverage, regardless of whether any services are used that month. until they’re enrolled in Medicare Parts A and B.

You decide how much to contribute per employee per month and what the budget covers. Employees must enroll in an eligible health plan to use their budget, and premiumspremium The monthly amount paid to maintain health insurance coverage, regardless of whether any services are used that month. come first. Beyond that, you choose whether to offer dental and vision plans through Thatch, and whether employees can spend leftover funds on other eligible health purchases.

Each employee enrolls in a health plan

The type of plans an employee can purchase with their health budget depends on their age.

Eligible plans

Employee age	Eligible plan types
Under 65	An Individual and Family Plan (IFP) purchased without a tax subsidy, either directly from an insurance companyinsurance company The company that provides insurance coverage. Also called an insurance provider. (such as Anthem, Kaiser, UnitedHealthcare, or BlueCross BlueShield) or from a government marketplace such as healthcare.gov or a state exchange; student health insurance; catastrophic plans (age 30 and under only)
65 or older, and those with a qualifying disability	Medicare

Ineligible plans

• Medicaid
• Individual and Family Plans partially or fully paid for with a subsidy or tax credit
• Group plans, including COBRACOBRA A federal law that allows employees to temporarily continue employer-sponsored health insurance after leaving a job, reducing work hours, or experiencing other qualifying events. Employees typically pay the full premium cost plus an administrative fee. administered by a former employer
• Veterans Affairs health plans

Thatch manages premiumpremium The monthly amount paid to maintain health insurance coverage, regardless of whether any services are used that month. payments for plans available on Thatch. For premiumspremium The monthly amount paid to maintain health insurance coverage, regardless of whether any services are used that month. deducted straight from Social Security, employees can reimburse themselves from their health budget. For eligible health plans purchased off-Thatch, like those on a state exchange or marketplace, employees can use their Thatch Card to pay premiumspremium The monthly amount paid to maintain health insurance coverage, regardless of whether any services are used that month..

Employees use leftover budget for eligible health expenses

Once an employee's premiumpremium The monthly amount paid to maintain health insurance coverage, regardless of whether any services are used that month. is covered, they can spend their budget on other eligible health expenses — things like copays, prescriptions, and other IRS-qualified costs. Employees can pay for these directly with their Thatch Card, submit a reimbursement for anything paid out of pocket, or shop the Thatch Market for curated health products and services. This spending is optional and only available if you've turned it on for your team.

Thatch supports your team

Thatch is the administrator of your ICHRA, and the broker of record for your employee’s health plans. We keep plan documents and compliance up to date as regulations change, enroll employees in their chosen plans, and handle payments and reimbursements — paying carriers directly, verifying that each expense qualifies, and processing employee reimbursement requests.

Employees also contact Thatch directly with their questions. Our team helps them choose a plan and understand their bill, so those questions go to us instead of your HR team.

How a health budget differs from group insurance

Offering a health budget through an ICHRA is different from managing group health insurance. Here are some of the biggest changes to understand as you and your employees make the most of your benefits.

Your employees own their health insurance policies

Employees own their individual and Medicare policies, and Thatch is the licensed brokerage.

What this means for you:

• We serve your employees best when they contact Thatch directly for all questions about their medical policies and health benefits.
• Unless otherwise communicated, Thatch handles premiumpremium The monthly amount paid to maintain health insurance coverage, regardless of whether any services are used that month. payments. As the policyholders, your employees will still receive invoices from their health insurance carrier.
• Individuals are responsible for keeping, changing, or discontinuing their medical policies when they leave the company.

Individual and Medicare plans cannot start before the first of the month after an employee submits their application. Most enrollment types can't be backdated.

What this means for you:

• Invite employees to Thatch during the month before they are eligible for healthcare benefits. We see best results when they are invited to enroll during the first two weeks of the prior month.
• For example, with a two week enrollment period:
  • An employee invited April 1–15 will have insurance on May 1.
  • An employee invited March 25–April 9 can have insurance on April 1 or May 1. See the Manage employee eligibility page.

Managing your employee health budget

• Your finalized health budget strategy stays the same for the plan year, from the time you invite employees until January 1 of the next year. This keeps your ICHRA compliant.
• You decide the waiting period for new hires, and use Thatch to schedule invitations and enrollment windows for eligible employees.
• Thatch bills your company for next month’s total healthcare costs. If the health budget you grant an employee is less than their monthly premiumspremium The monthly amount paid to maintain health insurance coverage, regardless of whether any services are used that month., our deductions report shows how much to deduct from their paycheck each pay cycle.

Offering other benefits alongside an ICHRA

Thatch fits alongside the other benefits you offer. Here's what to know about dental and vision plans, and about employees who use an HSA or FSA.

Dental and vision plans

You can add dental and vision plans to your employees' benefits on Thatch. To use their health budget toward these plans, employees must first enroll in an eligible health plan. After that, they'll see the option to select dental and vision coverage.

If you offer a Health Savings AccountHealth Savings Account A tax-advantaged savings account for individuals enrolled in a high-deductible health plan (HDHP). The employee own the funds, funds roll over year to year, and funds can be used for qualified medical expense. (HSA)

Thatch is not an HSA administrator, but employees can easily find HSA-compatible health plans on Thatch. If an employee contributes to an HSA during the plan year, the ICHRA cannot reimburse non-premiumpremium The monthly amount paid to maintain health insurance coverage, regardless of whether any services are used that month. expenses until the employee meets the individual or family minimum statutory deductibledeductible The amount a patient pays out of pocket for covered services before the insurance plan begins to pay. or a high deductibledeductible The amount a patient pays out of pocket for covered services before the insurance plan begins to pay. health plan (HDHP).

If you offer a Flexible Spending Account (FSA)

If you offer a health FSA, confirm it works alongside your ICHRA before your Thatch benefits begin. Thatch doesn't administer your FSA, so this check sits with you and your FSA provider.