What Are The Best States for ICHRA in 2026?

If you or your clients are planning on switching health benefit options in 2026, you may wonder how your business location may impact your choices. The individual coverage health reimbursement arrangement (ICHRA) is gaining popularity, and one reason is that it supports employers of all sizes, regardless of location.

Unlike traditional group health plans, ICHRAs operate using the individual market. This means that factors such as state-level premium costs, the number of insurance companies, and plan availability can significantly impact benefit affordability and employee satisfaction.

This article does a deep dive into which states are best for implementing the ICHRA based on 2026 individual insurance rates, so that you can make the right choice for your company and employees.

In this blog post, you’ll learn:

• How an ICHRA works and how it serves as an alternative to traditional group plans for employers of all sizes.
• Which states offer the most favorable conditions for an ICHRA in 2026.
• How employers and brokers can use state-by-state insights and a partnership with Remodel Health to design a personalized ICHRA regardless of location.

What is an ICHRA?

An ICHRA is a flexible, tax-advantaged health benefit that allows employers to give participating employees a defined monthly contribution, which they can then use toward their own individual health insurance coverage.

With an ICHRA, you set a fixed, monthly contribution amount for eligible employees. Based on how you structure your benefit, you can also allow employees to use their ICHRA funds not only for individual health insurance premiums but also for other qualified out-of-pocket medical expenses.

To participate, employees enroll in an individual health plan that meets minimum essential coverage (MEC) standards. Throughout the plan year, employees pay premiums and, if applicable, any eligible medical expenses upfront. They then submit proof of purchase for review, and once approved, you reimburse them tax-free up to their monthly contribution limit.

Remodel Health simplifies the reimbursement process with our AutoPay feature for employee premiums. We use your defined contributions to directly pay employees’ premiums, eliminating the need for them to cover the cost upfront.

What are the benefits of an ICHRA?

In addition to being a more personalized and scalable option than traditional group plans, the ICHRA offers several other advantages for both employers and employees.

Below are five key benefits to offering an ICHRA:

• Personalized coverage: Employees can choose the individual health plans that best fit their medical needs, healthcare providers, and budgets. Since individual coverage isn’t dependent on employment status, they can keep their health plan even if they change jobs.
• Flexible plan designs: Employers can tailor eligibility and contribution amounts by 11 job-based employee classes, age, and family status. This way, every employee receives an allowance tailored just for them, while keeping your organization on budget.
• No annual caps: Unlike other HRAs, the ICHRA has no annual contribution limits, meaning you can adjust the benefit according to your company’s goals and growth projections at the end of each plan year.
• Tax efficiency: Employer contributions are payroll-tax free and tax-deductible. Additionally, all ICHRA funds are income-tax-free for enrolled employees.
• Predictable cost savings: Employers can set fixed contribution levels and keep unused ICHRA funds at the end of the plan year or if an employee leaves their company. This helps you avoid the rate hikes and uncertainty that come with traditional group plan renewals.

What are the best states for an ICHRA?

Before you or your clients sign up for an ICHRA, it’s a good idea to determine which states are best for this type of health benefit.

Much of the public data comparing states for ICHRA adoption focuses on small group or fully insured benchmarks, which can be helpful for early evaluation, but often misses what matters most for large employers.

For organizations with experience-rated medical plans, the decision to move to ICHRA is less about chasing the lowest premiums and more about:

• Stability and depth of the individual market
• Carrier competition and negotiating leverage
• Network strength and provider continuity
• Employee experience across diverse geographies

In these cases, the most successful ICHRA transitions often occur in states with mature, competitive individual markets, even when premiums are higher than the national average for individual coverage.

At Remodel Health, we work closely with large employers and benefit consultants who recognize that ICHRA is not just a small-group replacement strategy, but a long-term alternative to experience-rated group coverage for large groups.

Below is a list of the states we believe are the best for ICHRA for large groups in 2026. We’ve also included data for several states where individual health insurance is often more cost-effective than small traditional group plans, based on average 2026 premium rates¹.

1. Ohio

Ohio’s individual market is characterized by above-average insurer participation, making it particularly attractive for large employers considering ICHRA. This higher carrier density increases plan choice and reduces disruption for employees accustomed to broad group networks. This competition also supports a wide range of plan designs, which helps large employers address the diverse needs of their workforce.

In 2026, individual health insurance is more affordable than small group coverage in every county in Ohio on average.

The chart below shows the variation in monthly insurance premiums (rounded to the nearest dollar) across Ohio's three most populous counties.

2. Pennsylvania

Pennsylvania benefits from a strong presence of regional carriers with deep provider relationships, which play an outsized role for large employers.

Employees often have access to carriers with established local networks, supporting continuity of care when switching from group. Regional variations do exist, but the overall market maturity supports large-scale ICHRA adoption.

Individual health insurance plan rates in Pennsylvania are also less expensive than the national average, according to KFF².

3. Indiana

Indiana remains a strong ICHRA state for large employers due to its stable individual market and predictable carrier participation.

The state supports multiple individual-market insurers across most regions, helping large employers avoid single-carrier dependency. Network access is also generally strong in places like Indianapolis, which is critical when transitioning employees from experience-rated group plans.

Remodel Health is an Indiana-based company, which makes us uniquely positioned to understand the health benefits needs of Indiana employers and employees, regardless of their budget, size, or location. Many of our largest and longest-tenured customers are based in Indiana, showing how an ICHRA can help Indiana businesses control their benefits spend with predictable, defined budgets.

While the premium differences aren’t as large as in other states on this list, individual health insurance is more affordable than small group coverage in every Indiana county.

The chart below shows the variation in monthly insurance premiums across Indiana’s three most populous counties.

Plus, small employers in Indiana with fewer than 50 employees may be eligible for a tax credit if they offer an ICHRA, thanks to House Bill 1004.

4. Oregon

Oregon’s individual market stands out for its competitive structure and coordinated care emphasis, which can be especially valuable for larger organizations. The state boasts a relatively high number of participating carriers, which creates meaningful plan differentiation. 

Oregon performs well for ICHRA when success is measured by adoption and experience for large groups, not just premium levels.

However, Oregon also benefits from lower individual health insurance plan rates than the national average, according to KFF².

5. Washington

Washington’s individual market combines robust carrier participation with strong regulatory oversight, which can benefit large employers evaluating ICHRA.

Employees generally have access to multiple carriers and standardized plan options, right around the average number of plans available per state.

While premiums can be higher for certain metal levels when compared to small group coverage, gold coverage wins out, with gold-level individual plans being less expensive on average than small group coverage. 

6. Massachusetts

Massachusetts is widely regarded as one of the most mature and competitive individual insurance markets in the country. High insurer participation in the individual market supports broad provider networks and plan variety.

Individual health insurance plan rates are also less expensive than the national average, according to KFF².

7. Wisconsin

Wisconsin performs well for large-group ICHRA strategies due to the strength of its regional carriers and provider networks, particularly in metropolitan and suburban areas.

The individual market is supported by insurers with long-standing provider relationships, which helps maintain continuity of care for employees transitioning from experience-rated group plans.

For large organizations, Wisconsin’s market structure aligns well with ICHRA strategies centered on stability, network access, and employee experience.

8. Minnesota

Minnesota is a strong ICHRA state for large employers due to its integrated care models and relatively stable individual insurance market. Employees often have access to plans tied to established health systems, which can ease the transition away from experience-rated group coverage.

Minnesota also boasts cheaper individual health insurance premiums than the national average, according to KFF².

For large employers evaluating ICHRA as a long-term alternative to experience-rated plans, Minnesota offers a compelling mix of stability, care coordination, and employee familiarity.

9. Georgia

In Georgia, individual health insurance is cheaper than small group health plans in every county except one. Generally, the southern counties offer more affordable rates than the central or northern areas.

The chart below shows the variation in monthly insurance premiums across Georgia’s three most populous counties.

10. South Carolina

In South Carolina, individual health insurance is cheaper than group coverage in every county.

The chart below shows the variation in monthly insurance premiums across South Carolina’s three most populous counties.

11. Kentucky

Individual coverage in Kentucky is more affordable than group coverage in almost every county.

The chart below shows the variation in monthly insurance premiums across Kentucky’s three most populous counties.

12. Missouri

Individual coverage in Missouri is more affordable than group health insurance in every county in the state.

The chart below shows the variation in monthly insurance premiums across Missouri’s three most populous counties.

13. Kansas

In Kansas, individual health insurance plans are generally more affordable than group plans in the majority of counties.

The chart below shows the variation in monthly insurance premiums across Kansas’s three most populous counties.

14. New Hampshire

In 2026, individual health insurance is more affordable than group plans in every county in New Hampshire.

The chart below shows the variation in monthly insurance premiums across New Hampshire’s three most populous counties.

15. Virginia

Virginia residents will see more affordable insurance rates than group coverage in the majority of counties in 2026.

The chart below shows the variation in monthly insurance premiums across Virginia’s three most populous counties.

How Remodel Health can help you adopt an ICHRA in your state

Implementing an ICHRA can be challenging, especially if you’re new to state regulations and individual insurance markets. Luckily, Remodel Health offers a full-service approach that helps employers successfully launch and manage an ICHRA, regardless of their business location.

We work with employers nationwide to design compliant ICHRA strategies tailored to their workforce, industry, and locations.

Our team manages:

• Plan design and set up
• Drafting required legal plan documents and notices
• Employee communication and education resources
• Staff onboarding
• Substantiation and attestation
• Compliance with federal and state policies and other requirements

With our ICHRA+® software solution, employees across all states can shop for individual health plans and receive personalized guidance from licensed benefits advisors, including Medicare specialists.

After implementation and enrollment, Remodel Health provides ongoing administration, compliance support, and reporting tools so business owners with employees in one state or multiple locations can offer an ICHRA with ease. With access to our full suite of tools, including employee premium AutoPay, overdraft protection, and year-round support, we make it easy for you to administer an ICHRA wherever your employees reside.

Conclusion

Determining whether the ICHRA is the right choice for your company doesn’t just depend on plan design. It also matters where your employees live and how strong the individual insurance markets are in those states. While an ICHRA is a great health benefit option regardless of your location, states with lower premiums can make an ICHRA more budget-friendly for employers, while still giving employees greater control over their coverage and care.

Whether you have a single-state business or support multi-state workforces, Remodel Health is here to help you build a compliant ICHRA that your employees will value. Reach out to us today to learn more!

References

1.  Ideon - Individual and Small Group ACA Markets by County - 2026
2. KFF - Average Monthly Marketplace Premiums by Metal Tier