Employers Embrace ICHRAs, Reshaping Health Insurance Choices

A growing number of companies are allowing employees to select their own health insurance plans, offering a potentially more personalized approach. This shift, facilitated by Individual Coverage Health Reimbursement Arrangements (ICHRAs), could alter the landscape of employer-sponsored health benefits.

The ICHRA Evolution

Instead of providing traditional group health plans, some businesses now give workers funds to purchase their own coverage through ICHRAs. This strategy lets employees make their own choices in the health insurance marketplace, a trend gaining momentum in recent years.

Proponents suggest that ICHRAs help small businesses offer benefits they couldn’t previously afford. Moreover, these arrangements align with a conservative vision of employee choice.

“It’s maybe not perfect, but it’s solving a problem for a lot of people.”

—Cynthia Cox, KFF

Under ICHRAs, employers contribute to health coverage, but the employees pick their own insurance policies. Companies often enlist third-party firms to aid employees in this selection process. These arrangements were created during the first Donald Trump administration and have expanded rapidly.

Advantages and Challenges of ICHRAs

ICHRAs bring predictable costs for business owners and relieve them of coverage decisions for their staff. This can be a relief for small businesses dealing with annual insurance cost fluctuations. According to a 2024 Kaiser Family Foundation analysis, 56% of US workers receive health insurance through their employers.

Jeff Yuan, co-founder of Taro Health, noted that business owners have many priorities, and this approach can help with focusing on the core mission. His company’s contributions depend on an employee’s age and coverage needs, potentially ranging from $400 to over $2,000 per month.

Employees can select from a wide array of individual insurance options under ICHRAs, potentially finding plans that better match their needs, like those tailored for individuals with diabetes. These plans are also portable, allowing employees to maintain coverage when changing jobs.

“Insurance works best when it moves with the consumer.”

—Mark Bertolini, Oscar Health CEO

The drawbacks include a narrower network of health providers within the individual market, which can make it difficult for patients with multiple doctors. Additionally, understanding terms like deductibles and coinsurance can be overwhelming.

ICHRA Growth and Future Outlook

While precise figures are unavailable, the HRA Council, a trade group supporting these arrangements, reports substantial growth. In 2025, about 450,000 people were offered coverage through ICHRAs, a 50% increase from the previous year. According to the Council, the entire market might be double that size.

Several factors could lead to greater ICHRA adoption. As healthcare expenses continue to rise, more businesses may seek to limit their costs. Furthermore, specific tax incentives promoting these arrangements could be included in the Republican tax bill under Senate consideration. The expiration of government subsidies for the Affordable Care Act marketplaces could make more individuals eligible.

Brian Blase, a former White House health policy advisor, said that, “The enhanced subsidies, they crowd out private financing.”