Yes. An ICHRA (individual coverage HRA) reimburses employees for individual health insurance and medical expenses. It does not include life insurance, and nothing in the ICHRA rules stops an employer from offering group term life (and AD&D, dental, vision or disability) as separate benefits. The $50,000 group term life exclusion works the same as with a traditional group health plan. The one restriction to remember: you cannot offer an ICHRA and a traditional group health plan to the same class of employees.
We are licensed insurance brokers, not CPAs or attorneys. Treat the tax and legal points on this page as general education, and confirm them with your own CPA or attorney before acting.
On this page
Why owners ask
When a business moves from a group health plan to an ICHRA, the group health carrier often was also providing the group life, dental and vision. Owners reasonably wonder whether those benefits have to go too. They do not. The ICHRA replaces the group medical plan only.
What the ICHRA rules restrict
- Class rule: within a given class of employees (for example, full-time employees), you may offer either an ICHRA or a traditional group health plan, not both.
- Health coverage only: the ICHRA reimburses premiums for individual health insurance (and, if you allow, other medical expenses). It is not a vehicle for life insurance premiums.
- Nothing about life insurance: group term life is not a group health plan, so offering it does not conflict with an ICHRA.
How to set up group life with an ICHRA
- Keep or quote a standalone group life plan. Many carriers write life, AD&D, dental, vision and disability without a medical plan, though some have higher participation requirements when there is no medical.
- Set eligibility (for example, full-time employees after a waiting period), which can match your ICHRA classes or not.
- Handle taxes as usual: the first $50,000 of employer-paid coverage is tax-free under Section 79, and coverage above that creates imputed income. See imputed income.
- Consider voluntary life so employees can buy more at group rates; see voluntary life.
A complete ICHRA benefits package
| Benefit | How it is provided with an ICHRA |
|---|---|
| Health insurance | ICHRA allowance; employees buy individual plans |
| Life and AD&D | Standalone group term life, employer-paid base amount |
| Extra life for employees | Voluntary group life through payroll |
| Dental and vision | Standalone group plans, or reimbursed through the ICHRA if eligible expenses are allowed |
| Disability | Group short-term and long-term disability |
Still deciding on an ICHRA?
We model ICHRA, traditional group and level-funded options against your actual roster, including the affordability math, and can add group life to any of them. See our ICHRA guide, level-funded guide, and the group life hub.
Frequently asked questions
Can an ICHRA reimburse life insurance premiums?
No. An ICHRA reimburses individual health insurance premiums and, if the employer allows, other qualified medical expenses. Life insurance premiums are not medical expenses.
Will a group life carrier write coverage without a medical plan?
Many will. Some require higher participation or have lower guaranteed issue amounts for standalone life. We quote several so you can compare.
Does offering group life affect ICHRA affordability?
No. ICHRA affordability is measured using the ICHRA allowance and the cost of the employee's benchmark individual health plan. Group life does not enter that calculation.
Start your life insurance request
Tell us what the coverage is for and who it would cover. For most requests we ask for each person's date of birth and sex so Erik can prepare for the call. We do not ask health or tobacco questions in this initial request. This is a request for help, not an insurance application or a promise of coverage.
Written by Erik Moran
Erik co-owns Moran Insurance Group with Amanda Moran and handles the agency's life insurance cases, from key person and buy-sell coverage to trust-owned policies. He works alongside clients' CPAs and attorneys, who make the tax and legal calls. More about Erik.
Sources
Moran Insurance Group is a licensed insurance agency. Our brokers are not CPAs, attorneys or tax advisors, and nothing on this page is tax, legal or investment advice. Tax figures and rules reflect our understanding as of October 2026 and can change. Coverage is subject to carrier underwriting and state availability. Confirm anything tax or legal with a licensed CPA or attorney before you act on it.