By Andy Stein, Founder & President, The Worksite Group
Last updated July 2026
By When a client’s ICHRA administrator is doing their job, nobody has to think about them. Employees get reimbursed on time, compliance paperwork gets handled without anyone chasing it down, and nobody’s calling in a panic because their coverage got cancelled. When those things stop running smoothly, it’s usually not a one-off glitch. It’s a sign the setup underneath that client’s ICHRA program has started to fail, and it’s worth stopping to look at directly instead of hoping the next renewal fixes itself.
Below, we’ll walk through what that failure actually looks like, which compliance requirements tend to slip through the cracks, and how to decide whether a client’s current administrator needs a fix or a full replacement.
What does it mean when an ICHRA administrator “isn’t working”?
An ICHRA administrator isn’t working when they can no longer reliably do the two things they exist for: get accurate reimbursements to employees on time, and keep the plan compliant with IRS and DOL requirements. Everything else, portal design, support tone, account manager friendliness, is secondary. If those two functions are shaky, the rest doesn’t matter.
Setting that baseline matters because it’s easy for a client to get distracted by surface-level annoyances (a clunky enrollment portal, a slow-loading dashboard) while missing the failures that actually put their company and their employees at risk.
The Two Places ICHRA Administration Breaks Down
ICHRA administration typically fails in one of two places, and they require different fixes. It helps to separate them before deciding what to do next.
Technology and platform failures
This is the software layer: the system that calculates reimbursements, tracks substantiation, and generates compliance documents. When it breaks, you’ll usually see:
- Reimbursements that are late, wrong, or duplicated
- No integration with payroll or the client’s HRIS, forcing manual data entry
- Compliance documents (SPDs, notices, substantiation records) that are outdated or missing
- Reporting that can’t produce an audit-ready record on request
Service and TPA failures
This is the human layer: the people who are supposed to answer questions, catch compliance issues before they become problems, and manage the account through renewal. Warning signs include:
- Support requests that sit for days with no response
- No licensed advisor available to help employees actually choose a plan
- An account manager who’s changed more than once in the past year, or one nobody at the agency could name
- No proactive review of the client’s contribution levels before renewal
- Vague or evasive answers when a client asks how they stay compliant with ACA and IRS rules
The Peterson-KFF Health System Tracker, drawing on interviews with employers, brokers, and ICHRA administrators, found that a genuine test of a good vendor is whether they can combine the financial pass-through with real, hands-on enrollment support, not just automate the payment side and leave employees to figure out plan selection on their own.
What are the warning signs your ICHRA administrator has failed?
The clearest warning signs are payment errors that threaten coverage, compliance documents you can’t produce on request, and a pattern of slow or unresponsive support. Any one of these on its own might be a bad month. Multiple showing up together, especially payment issues, means the underlying system has a real problem.
Run through this list. If you’re nodding along to three or more, it’s time for a formal audit, not just a frustrated phone call.
- An employee’s individual policy has been cancelled or put on hold because a premium payment didn’t go through.
- Approved reimbursements are taking well beyond a normal processing window (more on what “normal” means below).
- You can’t produce a current Summary Plan Description or ICHRA notice if someone asked for one today.
- Support requests routinely go unanswered for more than two or three business days.
- The account manager has turned over more than once in the past twelve months, or there isn’t one who could be called by name.
- Nobody proactively flagged this year’s updated affordability threshold before renewal.
- Employees have told you they didn’t know how to shop for a plan and picked something without real guidance.
- The administrator can’t clearly explain how they substantiate individual coverage or handle PCORI and ACA reporting.
How fast should ICHRA reimbursements be processed?
There’s no single ICHRA-specific legal deadline for reimbursement speed, but the federal claims procedure rule that governs group health plans (29 CFR 2560.503-1) sets outer limits: 72 hours for urgent claims, 15 days for standard pre-service claims, and 30 days for post-service claims, each extendable once by 15 days with notice.
In practice, a well-run administrator should be processing routine, already-approved reimbursements well inside that window, not treating the legal maximum as the target. If a vendor is regularly bumping up against 30 days for a straightforward reimbursement, that’s a service failure, not a compliance one, but it’s still worth flagging.
Which ICHRA compliance requirements get missed most often?
The compliance pieces employers miss most are the 90-day notice deadline, the annual affordability recalculation, PCORI fee filing, and Medicare Secondary Payer reporting. Each has a specific federal source and a specific penalty for getting it wrong, which is exactly why a good administrator should be tracking them without being asked.
The 90-day notice. Employers must give eligible employees the ICHRA notice at least 90 days before the plan year starts. This comes straight from the final HRA regulations (26 CFR 54.9802-4, 29 CFR 2590.702-2, and 45 CFR 147.123). Miss it, and new hires or renewing employees can end up scrambling to shop for coverage without enough runway.
Affordability. For plan years beginning in 2026, an ICHRA is considered affordable if an employee’s cost for the lowest-cost silver plan, after the employer’s contribution, doesn’t exceed 9.96% of household income. That’s up from 9.02% in 2025, per IRS Revenue Procedure 2025-25. An administrator that isn’t recalculating this figure every year, in either direction, is doing the math wrong. When the threshold rises, as it did for 2026, a stale lower number just means overpaying. When it drops, that same shortcut can push a plan out of compliance.
PCORI fees. For plan years ending between October 1, 2025 and October 1, 2026, the fee is $3.84 per covered life, filed on IRS Form 720 by July 31. This is confirmed in IRS Notice 2025-61, and it’s one of the larger year-over-year increases since the fee started. It’s a small dollar amount per employee, but missing the filing entirely is an easy, avoidable compliance gap.
Plan documents. If a participant requests a Summary Plan Description in writing and the administrator can’t produce it within 30 days, ERISA §502(c)(1) allows a court to impose a penalty of up to $110 per day. That’s a statutory number, not a slap on the wrist, and it falls on the plan administrator, not just the vendor.
Medicare Secondary Payer reporting. ICHRAs are generally treated as group health plans under Section 111 of the MMSEA, which means Medicare-enrolled participants typically need to be reported (with a narrow exception for HRAs under $5,000 a year). Under CMS’s final rule, noncompliance can carry a penalty of $1,000 per beneficiary, per day, and CMS has said plainly that it doesn’t have the authority to adjust or cap that amount. This is a newer enforcement area, with random quarterly audits beginning in 2026, and it’s one a lot of smaller administrators simply aren’t set up to handle.
A Real Pattern Worth Knowing About
In 2026, one ICHRA platform absorbed another company’s book of business through an acquisition. In the months that followed, a wave of public reviews described the same failure pattern: premium payments going out late or not at all, coverage getting suspended as a result, double billing between employer and employee, and support that ran entirely through a slow email queue with no phone line to call. One reviewer described paying for two months of coverage while their insurer had no record that they were covered at all.
This isn’t a rare event. Mergers, acquisitions, and platform migrations are one of the highest-risk moments in ICHRA administration, because the underlying systems (payment processing, enrollment records, compliance documentation) all have to transfer cleanly at the same time. If a client’s administrator has recently changed ownership, been acquired, or is migrating platforms, that’s a reason to ask harder questions now rather than waiting for something to break.
When does it make sense to switch ICHRA administrators?
The most common trigger for switching is a pattern of payment or reimbursement failures that puts employee coverage at risk, closely followed by a bad open enrollment season or a compliance scare that reveals gaps nobody knew existed. Renewal is the natural window to make the change, since it aligns a new vendor with a clean plan-year start.
Switching isn’t something to do lightly mid-year unless coverage is actively at risk. A transition takes real coordination: pulling a complete data export (employee and dependent details, plan and member IDs, contribution history, payment records), confirming exactly when the old vendor’s payment responsibility ends and the new one’s begins, and making sure there’s no gap in between where a premium simply doesn’t get paid. That handoff gap is the single biggest risk in any switch, and it’s worth building a written timeline with both vendors rather than assuming it’ll sort itself out.
Does switching ICHRA administrators trigger a special enrollment period?
No. A special enrollment period is triggered when an employee first gains access to an ICHRA, not when an employer changes which vendor administers it. Employees keep their existing individual policy through the transition and can’t use the switch itself as a reason to pick a new plan outside of open enrollment.
That’s good news for continuity, since it means a vendor switch doesn’t force employees to re-shop for coverage. It’s also a constraint worth knowing: if an employee is unhappy with their current plan, switching administrators won’t give them a mid-year do-over.
Fix or Switch? A Quick Decision Framework
Not every problem means it’s time to leave. Here’s a simple way to sort what you’re seeing.
| If you’re seeing… | It usually means… |
|---|---|
| One bad renewal cycle, but a responsive account manager and current compliance documents | Fix it. Ask for a formal service review and a written improvement plan. |
| Repeated payment errors that have put coverage at risk more than once | Switch. This is a structural problem, not a bad month. |
| Missing or outdated compliance documents (SPD, notices, substantiation records) | Switch, or fix immediately with a hard deadline. This is a liability issue, not a convenience issue. |
| Slow support, but accurate payments and clean compliance | Fix it first. Push for better SLAs before assuming a new vendor is needed. |
| No proactive renewal or affordability review from the vendor | Fix it. This is a service gap that’s usually solvable by asking for it directly, or by escalating if they can’t provide it. |
| Repeated problems with a specific carrier offered by your ICHRA plans | Fix it. If your administrator is responsive and leading the charge in getting in contact with the carrier, then they are doing their part to get you what you need. Proactive messaging to employees about your client’s previous experience may be necessary next enrollment period. |
How to Audit Your Current ICHRA Setup
Everything above can be turned into a working audit. Walk through a client’s reimbursement accuracy, support response times, compliance document status, and renewal process, and score each one honestly. For anyone who’d rather not build that from scratch, we’ve put the full audit into a downloadable scorecard that takes about fifteen minutes to run.
Frequently Asked Questions
How often should a client’s ICHRA administrator be audited? At minimum, once a year before renewal. If there’s been a payment error, a compliance scare, or an account manager change, audit immediately rather than waiting for the annual cycle.
Can a client switch ICHRA administrators mid-year? Yes, though it’s higher risk than switching at renewal. Mid-year switches are usually justified when coverage is actively at risk, such as ongoing payment failures, and should be planned around a clean payment handoff date.
Does a bad ICHRA administrator create legal risk for the employer, or just a coverage problem for employees? Both. Missed notices, outdated plan documents, and Medicare Secondary Payer reporting failures create liability for the employer as the plan sponsor, separate from any coverage disruption an employee experiences.
What should a client ask a new ICHRA administrator before switching? Ask for their average reimbursement turnaround time, how they handle Medicare Secondary Payer reporting, what their data migration process looks like, and whether there will be a named account manager. Get commitments in writing.
Ready to see how a client’s current setup scores? Download TWG’s ICHRA Administrator Audit Scorecard, or talk to our team directly about what a fix-or-switch decision looks like for that client.
Ready to talk through ICHRA opportunities for your book of business? Let’s connect.
— Andy Stein, Founder & President, The Worksite Group
