Short answer: When an employer offers its group plan to one class and an ICHRA to another, the ICHRA class (if it is full-time, part-time, salaried, non-salaried or a rating-area class) must have at least 10 employees for an employer with fewer than 100, 10% of headcount rounded down for 100 to 200, or 20 for more than 200.
How the minimum works under 26 CFR 54.9802-4(d)(3):
- It applies only when the employer offers a group plan to some classes and an ICHRA (CHOICE Arrangement) to others. An employer that moves everyone to an ICHRA does not face it.
- It does not apply to the class that keeps the group plan or to a class offered nothing.
- A rating-area class drawn as a whole state (or several whole states) is exempt.
- Employer size is what the employer reasonably expects to employ on the first day of the plan year.
- The class is counted by employees offered the ICHRA on the first day of the plan year, not by how many enroll, and later changes during the year do not matter.
Example: an employer expecting 150 employees wants salaried staff on the group plan and 14 hourly employees on an ICHRA. The minimum is 15 (10% of 150), so the 14-person class fails and the design has to change.
Classes can never be defined by health status, claims or Medicare eligibility.