Setting up an ICHRA for a 5-person team

An ICHRA for a five-person team is genuinely doable without a benefits department. Here's the sequence, with the two decisions that actually matter flagged.

The setup sequence

1. Pick a start date. ICHRAs can start any month — but an offer creates a special enrollment period for employees, and aligning with January 1 (enrolling during open enrollment, November 1 – December 15) keeps everyone's plan years clean.
2. Define employee classes. Full-time, part-time, salaried, hourly, geographic — the allowance must be offered on the same terms to everyone in a class (age and family-size scaling within a class is allowed). With five people, one class is usually simplest and safest.
3. Set the allowance. ← Decision one. There's no minimum or maximum. Anchor it to real local prices: a common approach is covering most of a benchmark Silver premium for a mid-age employee. Look up actual county rates before picking a number.
4. Adopt plan documents and send the required employee notice — generally 90 days before the plan year. Most owners use an ICHRA administrator ($15–$50 per employee per month) to handle documents, notices, and substantiation rather than DIY-ing compliance.
5. Employees buy individual plans and submit proof. Reimbursements are tax-free to them, deductible to you.

Decision two: the affordability line

Your allowance makes each employee's offer either "affordable" or not under IRS rules — and an affordable offer ends that employee's premium tax credit eligibility, even if they decline the ICHRA; an unaffordable one lets them choose between your money and their subsidy. A generous-sounding allowance that's technically unaffordable for one older employee, or one that strips a subsidized employee of a credit worth more than the allowance, are both real outcomes worth modeling per-employee before you set the number. This single calculation is where an hour with an agent or administrator pays for itself.

Two honest cautions

Owners aren't always eligible for their own ICHRA — it depends on entity type (C-corp owner-employees generally yes; sole proprietors, partners, and most S-corp 2%+ shareholders no — you'll use the individual Marketplace and the self-employed deduction instead). And once the ICHRA exists, employees without individual coverage can't take the money — a January start plus clear communication avoids stranding anyone.