Are you tired of the one-size-fits-all approach to employee health benefits? Have you ever wondered if there’s a more flexible, personalized option that could meet both your employees’ needs and your organization’s budget?
The individual coverage health reimbursement arrangement (ICHRA) is an alternative to traditional group health insurance. Introduced in 2020, this modern approach to health benefits gives employers an affordable way to provide comprehensive coverage. According to the HRA Council1, ICHRA adoption among U.S. employers grew by 29% from 2023 to 2024.
In this article, we’ll explain how ICHRA benefits employers, employees, and brokers alike.
In this blog post, you’ll learn:
The ICHRA is an employer-funded health benefit. With an ICHRA, employers offer their employees a monthly allowance for their individual health insurance premiums. This allows employers to help with their employees’ healthcare costs without the need to invest in an expensive traditional group health plan.
Here’s how it works:
Traditional group health plans are expensive. According to KFF2, the average annual health insurance premiums were $8,951 for single coverage and $25,572 for family coverage in 2024. These costs increase every year, especially with high benefit utilization. With ICHRA, employers can avoid the stress of annual rate hikes since they set their own benefits budgets. Rate hikes are also smaller with individual plans because there’s no medical underwriting in the ACA individual market. The ICHRA also comes with tax benefits. The money employers set aside for their eligible employees’ individual health coverage is tax-free.
In addition to the cost, fully-insured traditional group health insurance plans often have steep participation requirements. Usually, between 70% and 75% of your workers need to participate. Employers don’t have to worry about participation requirements with ICHRA.
Employers with self-funded plans can significantly benefit from switching to an ICHRA. If the self-funded plan is seeing large ongoing claims, employers can eliminate their risk with ICHRA.
Plus, health benefits can significantly improve an organization’s recruitment and retention efforts since they’re the most important perk employers can offer. PeopleKeep by Remodel Health’s 2024 Employee Benefits Survey found that 81% of employees said an employer’s benefits package is an important factor in whether they accept a job.
While organizations of all sizes can offer ICHRAs, they’re especially beneficial for larger employers. The ICHRA satisfies the Affordable Care Act’s (ACA) employer mandate for applicable large employers (ALEs) that need to offer affordable coverage.
The ICRHA also has several benefits for employees. A diverse workforce deserves personalized health benefits, not a one-size-fits-all plan. A 25-year-old employee in good health might not require the same level of coverage as a 45-year-old employee with a chronic condition. So why should an employer offer them the same coverage?
The ICHRA offers flexibility for employees. They have the power to choose the individual health insurance plans that work best for them. Whether it’s the lowest-cost silver plan or the highest-cost gold plan on the market, the choice is up to them.
Plus, the money they receive from their employer is on a tax-free basis. It won’t count as part of their taxable income.
A broker can easily grow their book of business with an ICHRA. By incorporating ICHRAs into their offerings, brokers can diversify their revenue streams beyond traditional group health insurance policies while increasing client engagement.
The ICHRA offers several benefits to medical insurance brokers:
By collaborating with Remodel Health to provide ICHRAs to your clients, your clients gain access to our cutting-edge ICHRA+ software and exceptional white-glove service from experienced professionals who genuinely care. Our devoted team of experts guarantees that your clients receive the comprehensive support they deserve.
Understanding how the individual coverage HRA (ICHRA) works can transform the way you look at employee benefits. By leveraging this model, organizations can provide tailored health coverage solutions that meet the varied needs of their employees, all while managing their health benefit costs effectively.
No matter a company’s size or budget, Remodel Health’s ICHRA+® solution makes it easy for every broker to design an ICHRA. We offer customized benefits that provide cost savings and flexibility for your clients.
This blog article was originally published on August 6, 2020. It was last updated on May 29, 2025.