What happens if our company grows past 50 employees while using an ICHRA?

Nothing bad happens to your ICHRA — you can keep offering it. What changes is that your company becomes an "Applicable Large Employer" (ALE), which comes with one new rule to follow: the ACA employer mandate.

In plain terms: ALEs need to offer affordable coverage to full-time employees, or they could owe a penalty if even one employee gets a tax credit on the ACA marketplace. Employers under 50 don't have to worry about this at all.

The good news: ICHRA still counts as compliant coverage for ALEs. The IRS created specific "affordability safe harbors" for ICHRA employers, so this is a solvable problem, not a dealbreaker.

How much time do I have to make a change? In general, you should make an adjustment to offering an affordable ICHRA offered by an ALE ICHRA platform at your next plan renewal after hitting 50 full time equivalent employees. If you have more questions we recommend that you consult your CPA about your Applicable Large Employer Status.

Source: IRS Notice 2018–88, referenced in the ICHRA Final Rule (84 Fed. Reg. 28948).

Grey area worth knowing: The 50-employee count is based on full-time equivalents averaged over the prior calendar year — not a headcount snapshot today. So a company can briefly go above 50 and still not be an ALE yet. That gives growing companies some natural breathing room.