ICHRA Employee Classes: The 11 Legal Buckets and the Size Rules That Break Most Designs

There are exactly 11 ICHRA employee classes, and you can use any combination of them to vary contributions and eligibility. But if you offer a traditional group plan to one class and an ICHRA to another, minimum class size rules kick in, and that's where most designs fall apart.

What are the 11 ICHRA employee classes?

The final rules define exactly 11 classes you can use to segment your workforce. According to the Newfront ICHRA Guide for Employers, those classes are: full-time, part-time, seasonal, employees in a geographic rating area, employees in a waiting period for traditional group health plan coverage, collective bargaining agreement (CBA) unit employees, non-resident aliens with no U.S.-based income, salaried employees, non-salaried employees, outside staffing firm temps, and any combination of those classes.

That last one matters. You can stack classes. Salaried plus full-time in a specific rating area is a valid class, for example.

Combination classes inherit size requirements if any component belongs to one of the five restricted classes. Each class can only receive one benefit option. You can't offer employees within the same class a choice between a group plan and an ICHRA. Pick one per class.

Which classes trigger minimum size rules, and what are the thresholds?

Minimum class size rules only fire when you're running a split design, a traditional group health plan for one class and an ICHRA for another. If you're going full-ICHRA for everyone, these rules don't apply at all.

Only five of the 11 classes are subject to minimum size requirements: full-time, part-time, salaried, non-salaried (hourly), and employees in the same geographic rating area. The Take Command Health ICHRA class rules guide lays out the thresholds by employer size:

These thresholds are measured on the first day of the plan year. If your class falls short when the plan year opens, the design is noncompliant from day one, not just going forward.

Which classes are exempt from minimum size requirements?

Five classes never trigger minimum size rules, regardless of how many employees are in them. Per the Newfront ICHRA Guide for Employers, those are: seasonal employees, CBA unit employees, employees in their waiting period for traditional GHP coverage, non-resident aliens with no U.S.-based income, and outside staffing firm temps.

Geographic rating area classes have a nuance worth knowing. Size rules apply only when the rating area used is smaller than a state. One remote employee in a state where you have no other workers can be a valid class of one.

But if you're carving at the county level, minimum size rules apply. A single employee in San Francisco can stand as their own geographic class without tripping a size threshold, as long as the class is defined at the state level.

How do you carve hourly vs. salaried or seasonal vs. full-time without a discrimination problem?

The class structure itself is the anti-discrimination mechanism. Because the IRS defined these 11 classes in the final rules, using them doesn't create a discrimination violation on its own. You're allowed to offer salaried employees a group plan and give hourly employees an ICHRA, or vice versa.

The mistake isn't in which class gets which benefit. The mistake is building a class that's too small. Say you have 150 employees and you want to offer the group plan to your 12 salaried managers while pushing all 138 hourly workers to an ICHRA.

At 100–200 employees, your minimum class size is 10% of total staff, which is 15 employees. Your salaried class of 12 fails the threshold. The whole design fails.

Getting participation and class design wrong doesn't just create a compliance problem. It can destabilize the group plan itself when the wrong population stays on it.

What's the classic mistake employers make with split designs?

The most common error is offering the group plan to one class and an ICHRA to another without counting heads first. Employers assume the class structure is valid because it uses a legally recognized category. It's not valid if the class is undersized.

Count employees in the restricted class before the plan year starts. If the number doesn't clear the threshold for your employer size, the split design fails on day one. Redesign the classes or consolidate the benefit before you file.

The cleanest fix is often moving to full-ICHRA for all employees. Minimum class size rules disappear entirely. No thresholds to track, no headcount recertification each year.

Frequently asked questions

Can an employer offer different ICHRA contribution amounts to different classes?

Yes. Each class can receive a different monthly allowance. You can offer full-time employees $500 per month and part-time employees $200 per month. The amounts don't have to be equal across classes, but every employee within the same class must receive the same allowance structure.

Do minimum class size rules reset if an employer's headcount changes mid-year?

No. The thresholds are measured on the first day of the plan year. If a class clears the minimum on that date, it stays compliant for the full plan year even if headcount drops. If it doesn't clear on day one, the design is noncompliant from the start.

Can a new hire class be used to delay ICHRA eligibility?

Yes. Employees in a waiting period for traditional group health plan coverage are a recognized class. You can use this class to delay ICHRA access while a new hire waits for group plan eligibility. Once the waiting period ends, the employee moves into their permanent class.

What happens if an employer accidentally creates a class that's too small?

The design is noncompliant. Employees in the undersized class who received an ICHRA may lose ACA safe harbor protections for the employer. The fix is to either grow the class to meet the threshold or restructure which benefit that class receives before the next plan year.