Hospitals exist to care for people—so it’s hard to reconcile that a benefit meant to support their employees often ends up hurting them. Many hospitals self-fund their group health plans in an effort to maintain more control over their health benefits costs. But high claim volume from their workforce can wrest financial control out of their hands.
Healthcare workers are different. They’re exposed to more risk, access care more often, and are more likely to manage chronic conditions.
The result? Higher claims, higher costs—and more of that cost pushed onto employees through higher premiums, narrower networks, and higher copays and deductibles. So what if there’s a better way?
What if hospitals could offer employees access to quality health coverage that doesn’t punish them for needing care? What if they could stabilize their benefits budget and give their team real choice?With an individual coverage health reimbursement arrangement (ICHRA), all of this is possible.
In this article, you’ll learn:
According to KFF, there are over 6,000 hospitals in the U.S. that employ 6.7 million individuals1. Labor is the largest expense for these employers, and nearly a third of that cost goes toward employee benefits like health insurance2.
Hospitals often self-fund their group health benefits to help manage labor costs and maintain more control over their budget. This means that instead of paying an insurance carrier a premium to cover employee health claims, they earmark money to pay for these healthcare costs themselves.
While this model does offer more financial control, it also comes with more risk—and hospital employees may represent a riskier population than those in other industries.
Research has shown that:
These realities drive up employee claims, which increase the cost of offering a self-funded plan for employers. When this happens, employers often pass down some of these increased costs in the form of higher premiums and increased employee cost-sharing, which act as higher barriers to employee enrollment.
This sets off a self-perpetuating cycle: as healthier employees opt out, those who do enroll tend to be the ones who need coverage most—typically with higher medical costs. Their claims drive plan expenses even higher. This prompts additional cost-sharing and further shrinks the risk pool.
The result is a benefit that’s increasingly difficult to afford and harder to sustain.
An ICHRA can flip this script. With this group health benefit, hospitals can provide a fixed contribution for employees to purchase their own coverage instead of funding unpredictable claims year after year.
The ICHRA is a formal, IRS-approved group health benefit that has been around since 2020. It works as follows:
Employers can use an ICHRA to provide a more personalized health benefit while satisfying the ACA employer mandate. This model relieves hospitals of the burden of managing risk and claims. But it’s not just an administrative win—it’s a meaningful shift for revenue and for employees, too.
What does this mean?
There’s also another benefit to consider. By transitioning employees from a traditional group plan to an ICHRA, hospitals can turn employee care into additional revenue.
Here’s how that works:
Shifting from a traditional group health plan to an ICHRA model is a strategic move that can help employees, benefit administrators, and financial officers. But it’s not without complexity.
Hospitals must become familiar with an entirely new plan strategy. They need to understand how they can structure and administer this health benefit. Employers may wonder how they can define eligibility, tailor contributions, and distribute allowances.
There’s also the matter of change management for employees. Employees may be unfamiliar with how an ICHRA works and what their responsibilities are. They may need help shopping for and selecting coverage or need assistance if they run into any challenges with their carrier.
Without the proper support, this transition can feel like a heavy lift, especially for a large group. But the challenges the shift to ICHRA presents aren’t dealbreakers—they’re simply reminders that this health benefit isn’t plug-and-play. It’s a powerful tool that requires expert implementation, thoughtful communication, and ongoing support.
That’s where the right ICHRA partner makes all the difference.
If you’re a group broker supporting hospitals, you’re already navigating one of the most complex benefits environments out there. You understand the pressure your clients face—rising claims, shrinking margins, and employees who expect more from their health benefits.
At Remodel Health, we’re here to help you expand your toolbox, not replace it. We partner with brokers to bring ICHRA to hospitals in a way that’s thoughtful, compliant, and backed by experience. From providing detailed quotes that meet the unique needs of each organization to supporting employees throughout the individual plan enrollment process, we make the transition to an ICHRA feel familiar—while delivering real financial and strategic upside.
When you work with Remodel Health, you get:
When traditional models fall short—straining budgets, limiting employee choice, and turning benefits into burdens—it’s time to look elsewhere. The ICHRA offers hospitals a new path forward: one that delivers cost control, flexibility, and even the potential to transform employee care into a source of revenue.
But switching to ICHRA is a big shift. And with any major change, success hinges on having the right guide.
That’s why partnering with an experienced, trusted ally like Remodel Health matters. We walk with you every step of the way to ensure your ICHRA strategy works now and in the future.
Want to explore how ICHRA could work for your hospital clients? Let’s talk.