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.
Below are just some of the many medical expenses that can be reimbursed tax-free under an ICHRA when included in the plan design:
- Abdominal supports
- Abortion
- Acupuncture
- Air conditioner (when medically necessary)
- Alcoholism treatment
- Ambulance services
- Anesthetist fees
- Arch supports
- Artificial limbs
- Autoette (used for disability relief)
- Birth control pills (prescribed)
- Blood tests and transfusions
- Braces
- Cardiographs
- Chiropractor care
- Christian Science practitioner services
- Contact lenses
- Contraceptive devices (prescribed)
- Convalescent home (for medical treatment)
- Crutches
- Dental treatment, X-rays, and dentures
- Dermatologist visits
- Diagnostic fees
- Drug addiction therapy
- Prescription drugs
- Elastic hosiery (with prescription)
- Eyeglasses and eye exams
- Fluoridation units
- Guide dogs
- Gum treatment
- Gynecologist appointments
- Healing services
- Hearing aids and batteries
- Hospital bills and stays
- Hydrotherapy
- Insulin and diabetes care supplies
- Lab tests
- Lead paint removal (medically necessary)
- Lodging for outpatient medical care
- Neurology visits
- Nursing care (including board and meals)
- Obstetrician care
- Operating room fees
- Ophthalmologist and optometrist services
- Oral surgery
- Organ transplants (including donor costs)
- Orthopedic shoes
- Osteopath services
- Oxygen and related equipment
- Pediatrician visits
- Physician fees
- Physiotherapy
- Podiatrist visits
- Postnatal and prenatal care
- Practical nurse for medical services
- Prescription medications
- Psychiatrist and psychologist sessions
- Psychotherapy and psychoanalysis
- Radium therapy
- Registered nurse fees
- Special schooling for individuals with disabilities
- Spinal fluid testing
- Splints
- Sterilization procedures
- Surgery
- Telephone or TV equipment for the hearing-impaired
- Therapy equipment
- Transportation expenses related to medical care
- UV ray treatments
- Vaccines
- Vasectomy
- Vitamins (only if prescribed)
- Wheelchairs
- X-rays
Expecting mothers can also receive reimbursements for prenatal massage and chiropractic care during their pregnancy.
What’s Not Covered? ICHRA Exclusions to Know
While ICHRAs cover a wide range of expenses, not everything qualifies. Some products and services are considered general health or lifestyle-related, and therefore aren't reimbursable—even if they support your overall wellness.
Here’s a quick look at what’s not eligible for ICHRA reimbursement:
Over-the-Counter Items That Don’t Qualify
- Lip balm (e.g., ChapStick)
- Acne treatments
- Cosmetics and moisturizers
- Toiletries (toothpaste, deodorant, etc.)
- Daily vitamins and supplements
- Herbal remedies
- Sunblock lotion
- Medicated shampoos and soaps
- Weight loss drugs
- Fiber supplements
Medical Expenses That Aren’t Deductible
- Gym or athletic club memberships
- Auto insurance (even if it includes medical coverage)
- Bottled water
- Prepayments for services not yet received
- Boarding school fees
- Commuting expenses for medical appointments
- Cosmetic procedures and surgeries
- Funeral, cremation, or burial costs
- Resort or spa-based health programs
- Illegal operations, procedures, or drugs
- Maternity clothing
- Non-prescription medications
- Life, disability, or income protection insurance
- Scientology counseling
- Social or recreational activities
- Special foods or beverages
- Custom vehicles (unless medically required)
- Stop-smoking programs
- Swimming pools or hot tubs
- Travel solely for general health improvement
- Tuition and travel for behavioral schools
- Weight loss programs (unless medically prescribed)
Vitable ICHRA: Better Benefits Start Here
At Vitable, we’re setting a new standard for health benefits. We’re a health benefits platform designed to make healthcare better for everyday workers. With Vitable, employers can offer a more flexible, affordable, and accessible experience for their teams, without the complexity of traditional insurance processes.
We offer a suite of benefit options, including ICHRA plans, but unlike traditional ICHRA plans, every ICHRA through Vitable includes our enhanced Primary Care membership. That means your employees get direct access to everyday care—like primary care visits, urgent visits, preventive screenings, and chronic condition support—without having to use any of their ICHRA reimbursement allowance. By covering essential, everyday care through Vitable’s Primary Care membership, your employees’ reimbursement dollars go further, helping them pay for other eligible medical expenses like prescriptions, dental care, or specialty visits.
It’s a better healthcare experience for employees and a smarter, more sustainable solution for employers.
Whether you’re just starting to explore ICHRA or ready to make the switch, we’re here to help. Our team can walk you through how ICHRAs work, what expenses are eligible, and how Vitable can help you create a benefits plan that fits your budget and supports your workforce.
Ready to offer better benefits? Get started today!
