Employers of all sizes may offer an ICHRA to any type of worker, from full time to part time employees, as well as independent contractors.

Employers don’t choose the insurance company or specific plans when offering an ICHRA. Instead, they decide how much to contribute toward the benefit, and employees select the insurance company and plan that best fit their needs. Rates are community-rated, meaning they aren’t based on underwriting, claims history, or health conditions. If an employee applies for coverage, the insurer is required to offer the plan at the listed rate.

ICHRA plans are considered ACA-compliant, as all qualified plans provide minimum essential coverage and employer contributions can be structured to meet affordability requirements. COBRA also applies to employers subject to ERISA; however, state continuation does not apply.

ICHRAs are compatible with both healthcare flexible spending accounts (FSAs) and health savings accounts (HSAs). Employers can offer one or both alongside an ICHRA.

Employers may pay insurance companies on behalf of employees and deduct any remaining premium from payroll if the cost exceeds the employer contribution. This approach offers a familiar “group plan” experience for employees. Alternatively, employers can require employees to pay the full premium upfront and then submit reimbursement requests for the employer contribution, which may create cash flow challenges and added inconvenience for some employees.

The 2024 + 2025 plan years saw continued growth, with new insurance companies entering the market and existing insurers expanding into additional states.

Individual health insurance rates are at parity with—or lower than—small group rates in 19+ states, and this trend continues to expand.