Is ICHRA still a viable option when individual insurance rates increase?

Austin Lehman
September 22, 2025
Health Insurance Education, Individual Coverage HRA

In recent weeks, we’ve seen headlines about the rising individual health insurance premiums. Understandably, employers and benefits consultants who rely on or want to offer the individual coverage health reimbursement arrangement (ICHRA) may be wondering whether it still makes sense in today’s environment.

Here’s the good news: ICHRA is still one of the most sustainable options available for employer-sponsored health benefits.

The ICHRA market remains not only strong but continues to expand, offering more opportunities than ever. Allow me to explain why ICHRA remains effective and provide examples of it in action.

Understanding rate increases

While we are seeing a more substantial increase than in years past, it’s important to note that no matter the type of health plan, whether group or individual, rates tend to increase each year. They often reflect broader healthcare trends, like rising provider costs, increased demand for services, inflation, and policy shifts.

Analysis of rate filings

Many states have released early rate filings for 2026. Our team of experts at Remodel Health analyzed the unweighted rate increases for both on- and off-exchange plans across 11 states.

	On-exchange			Off-exchange
	Bronze	Silver	Gold	Bronze	Silver	Gold
Connecticut	12.86%	23.84%	8.59%	7.59%	15.32%	14.30%
Illinois	11.29%	29.99%	1.36%	14.09%	12.53%	N/A
Indiana	22.60%	14.53%	19.09%	12.14%	10.34%	14.01%
Maine	17.34%	16.40%	20.74%	11.22%	11.07%	11.40%
Maryland	14.25%	13.31%	14.21%	19.22%	14.62%	12.58%
Michigan	14.02%	16.09%	15.77%	N/A	15.67%	12.17%
Minnesota	20.36%	18.20%	16.50%	23.33%	16.54%	13.07%
Oregon	11.51%	4.42%	8.01%	1.36%	1.84%	10.13%
Washington	12.29%	36.90%	1.25%	9.94%	7.02%	7.78%
Rhode Island	26.27%	25.23%	26.14%	27.59%	26.44%	27.17%
Colorado	26.82%	28.21%	23.13%	31.34%	31.37%	36.76%

Key Takeaways:

Across the metal levels, premium increases are typically steeper for on-exchange plans than for off-exchange ones. On-exchange carriers are making adjustments to account for adverse selection due to changes to Medicaid eligibility and the potential expiration of enhanced advance premium tax credits (APTC).
- Smaller increases for off-exchange plans are advantageous for employers offering an ICHRA. Off-exchange options provide them with more plans, wider networks, and richer coverage options, all while maintaining the same ACA protections.
Silver plans are projected to experience the most significant rate hikes, whereas bronze and gold plans face relatively moderate increases.
- Silver loading influences the rate increases for on-exchange silver plans in many states. Because of cost-sharing reductions (CSRs), carriers can lose money on these plans. States like Washington¹ are now allowing a uniform CSR silver loading adjustment for the first time in 2026 to offset this, which is increasing these on-exchange silver plan rates.

What’s the difference between on-exchange and off-exchange plans? We break it down in our latest article.

What’s causing the increased rates

The steeper premium increases projected for 2026 aren’t the result of a single issue, but rather the convergence of several market forces:

Tariffs on imported medical supplies and prescription drugs are adding cost pressure across the healthcare system.
The rapid growth of GLP-1 drugs for diabetes and weight management is reshaping utilization patterns, with insurers absorbing the high price tags of these breakthrough medications.
The expiration of the enhanced advanced premium tax credits (APTCs) means many individuals will feel the impact of rate hikes more directly than in prior years.

Why ICHRA still wins

Through ICHRA, employers set defined contributions, giving them total control over their budget. Employees are no longer at the mercy of a renewal process that locks them into a single carrier with only a few plan options. Instead, employees can shop for coverage on the individual market, choosing coverage that fits their needs.

Even in the face of premium increases, ICHRA still provides advantages that traditional group plans can’t touch.

1. Group health insurance will have a high increase year, too

One of the significant reasons for individual health insurance increases in 2026 is high medical utilization and medical inflation. Healthcare costs are soaring as carriers cover the increasing cost of medical care and prescriptions like GLP-1s. These exact causes will increase group policies as well. A PwC survey² projects that medical costs will rise 8.5% for group plans in 2026, the same as in 2025.

Inflation is now finding its way into multi-year contracts with premium increases at renewal. If you or your clients are seeing a steep rate increase with group coverage, an ICHRA may be the solution for you. It’s worth having a conversation and seeing what savings and flexibility an ICHRA can provide.

2. Budget certainty for employers

The average cost of employer-sponsored health insurance in the U.S. is expected to rise by 9% in 2025³, exceeding $16,000 for each employee. With ICHRA, employers set their contribution budget and stick to it for the year. Rising premiums won’t force employers to scramble for coverage options or cut into raises and benefits elsewhere. Employers can increase their allowances each year by a set amount to ensure affordability. Employees can then decide which off-exchange plans work best for them and their budget.

Example: A family services nonprofit in Ohio with 150 employees recently transitioned from a fully insured group plan to an ICHRA with Remodel Health. The organization went from rate increases to a shift that has already delivered meaningful results.

Result: The nonprofit saved more than 10% on its current benefits costs, even accounting for the upcoming 2026 rate hikes. At the same time, employees gained access to richer plan options than they previously had, with most now enjoying a lower out-of-pocket maximum.

3. Customization for employees

Each employee is unique. ICHRA allows them to shop for plans based on their own healthcare needs, networks, and even prescription coverage. They’re no longer stuck with a one-size-fits-all group plan.

Cost increases are also closer to the member. If an employee wants to save money on premiums, they can choose a plan that their ICHRA allowance mainly or entirely covers. It’s up to the employee if they want to enroll in a more expensive plan based on their needs. So, come renewal, if the employee experiences a significant rate increase, they have the option to reevaluate their chosen plan.

Example: A multi-state staffing company had employees in five states, each with different healthcare networks and provider access. Their group plan worked for some employees, but others were stuck with out-of-network providers or high deductibles.

Using ICHRA, the staffing company tailored contribution amounts across various states to ensure employees had equitable buying power.

Result: One staff member in Texas chose a Blue Cross Silver plan with a low deductible and kept their preferred doctor. Another in Florida chose a Bronze plan with an HSA to maximize savings.

4. National reach for remote workers and multi-state workforces

In a remote and hybrid world, recruiting across state lines is the norm. ICHRA enables nationwide coverage options without complicating benefits administration.

Example: A tech company with remote workers in 12 states struggled to find a group plan that provided equitable benefits across state lines. They switched to ICHRA and provided $600 monthly to each employee.

Result: Workers in lower-cost areas stretched their dollars further. Those in high-cost areas appreciated the freedom to pick from a wide range of options on the exchange.

5. Insurance is about the risk pool

ICHRA moves employers from a 50-1,000 life risk pool to a state-wide risk pool, typically in the hundreds of thousands. If there is any industry that lives in the law of large numbers, it’s health insurance. This larger pool creates greater cost stability over time.

The ICHRA is growing in popularity

ICHRA’s popularity continues to surge annually. New data from the HRA Council⁴ reveals a 34% increase in ICHRA ALE adoption between 2024 and 2025. Even more telling, 92% of employers who provided an HRA last year have opted to maintain it. This satisfaction and growth have major insurance carriers, such as Centene and Oscar, leaning into ICHRA.

Investment dollars are also going to ICHRA vendors. In the last 12 months, a remarkable amount of money has flowed into the industry, which validates the industry overall. Investors and carriers believe in the ICHRA and the switch to a defined contribution model.

The future is choice and control

Health insurance is changing, and I believe that’s a good thing. The era of one-size-fits-all, take-it-or-leave-it group plans is giving way to personalization and flexibility. Rising individual market rates are a challenge, but ICHRA gives us the tools to navigate them effectively. It creates a new employee benefits option for small businesses to compete with large businesses for talented team members.

If you or your clients are feeling the pressure of rising premiums, know this: you don’t have to go back to the old way of doing things. With the right partner and the right strategy, ICHRA continues to be a forward-thinking solution that delivers value for you and your team.

At Remodel Health, we’ve helped thousands of organizations navigate rising rates while keeping benefits aligned with their budgets and employee needs. For more than a decade, we’ve helped organizations transition to individual health benefits, and we’ve guided them through market shifts like this before. Smaller companies are working with us to create benefits packages that compete for talent with the largest companies. No longer do you have to work at a Fortune 500 company to get benefits to care for your family.

When rates increase, our team helps clients reevaluate contribution strategies, explore supplemental solutions, and ensure employee communications remain clear and supportive.

Let’s keep building smarter, more sustainable benefits together.