The individual coverage health reimbursement arrangement (ICHRA) is a personalized, budget-friendly alternative to traditional group health insurance. Thanks to its flexibility, ICHRA’s popularity has soared since its introduction in 2020. According to the HRA Council1, the adoption of ICHRA among U.S. employers increased by 29% between 2023 and 2024.
While ICHRA presents opportunities for all sectors, certain industries can benefit more than others.
In this article, we’ll highlight industries where ICHRA works especially well and explain how employers can leverage this benefit to meet their unique employee benefit needs.
ℹ️ Note: Congress is currently considering a bill that could codify ICHRA into statute as the CHOICE Arrangement. Learn more about these potential changes in our blog post.
In this blog post, you’ll learn:
- How organizations can offer an ICHRA through Remodel Health.
- How ICHRA benefits employers of all sizes.
- Which industries offer ICHRAs.
Learn how employers across various industries use the ICHRA. Get our 2024 ICHRA Report!
How does ICHRA work?
With ICHRA, employers can give employees a tax-free allowance for individual health insurance premiums. This way, employers can offer their employees health coverage without purchasing a pricey group plan.
There are no annual contribution limits with ICHRA. Employers can offer employees as much as they would like as an allowance. They can also vary allowances using employee classes, family status (like single or married), and age. Plus, unused funds stay with the employer.
Why should you offer ICHRA?
Tailoring healthcare benefits to meet the specific needs of an organization’s diverse workforce can help the employer save money, attract top talent, and easily adapt to changing healthcare regulations.
An ICHRA offers financial predictability by eliminating unexpected costs, such as the premium hikes that happen every year with group health insurance. ICHRA gives employers complete control over their money since they set their budget.
Plus, if an employer wants to hire skilled employees, they need a comprehensive benefits package. Health benefits top the list for job seekers. PeopleKeep’s (part of Remodel Health) 2024 Employee Benefits Survey found that 92% of employees consider health benefits important. Another 81% said an employer’s benefits package is an important factor in whether they accept a job.
ICHRA is an excellent solution for applicable large employers (ALEs) with more than 50 full-time equivalent employees (FTEs). ALEs can satisfy the Affordable Care Act’s employer mandate by offering an ICHRA with an affordable allowance. When offering an ICHRA with Remodel Health, we’ll help you determine an affordable allowance.
Which industries are ideal for ICHRA?
Group health insurance plans are one-size-fits-all. Plus, who wants to deal with their participation requirements and increasing costs? As healthcare needs diversify and workforce demographics shift, many industries are using ICHRA as an innovative approach to employee benefits.
Drawing on insights from our 2024 ICHRA Report, we’ll look at the key industries that thrive using ICHRAs.
Healthcare
Healthcare workers dedicate themselves to saving lives, preventing illnesses, and offering care to those in need. Yet, many struggle to afford their own medical expenses. According to a 2024 Mercer study2, only 56% of healthcare workers feel they can manage healthcare costs without financial strain. ICHRA supports healthcare employees by reimbursing them for the medical items and services they need.
The healthcare industry includes:
- Hospitals
- Free clinics
- Nursing homes
- Assisted living facilities
- Physical therapy centers
- Mental health centers
Our report reveals that ICHRA is particularly popular among healthcare organizations with more than 100 employees.
| Employer size | ICHRA utilization |
| 2 to 20 employees | 13% |
| 21 to 99 employees | 34% |
| More than 100 employees | 52% |
Construction
The construction industry is known for being a physically intense and fast-paced work environment. Not only are construction workers at higher risk for injuries, but major projects are delayed when they’re out sick. They need health benefits that are designed to support their unique needs. With ICHRA, each worker can pick the health plan that works best for them.
The construction industry includes:
- Residential construction
- Commercial construction
- Carpentry
- Surveying
- Plumbling
- HVAC
Findings from our report show that ICHRA is most popular among medium-sized construction businesses with 21 to 99 employees.
| Employer size | ICHRA utilization |
| 2 to 20 employees | 18% |
| 21 to 99 employees | 50% |
| More than 100 employees | 30% |
Dental
Dental offices often provide free or discounted dental care to their employees as a benefit, but they also need to support the overall well-being of their workforce. With ICHRA, employees receive a monthly allowance to cover health insurance costs and potentially other ancillary premiums.
The dental industry includes:
- Dental clinics
- Pediatric dentist offices
- Orthodontist offices
- Cosmetic dentist offices
Much like in construction, our findings reveal that ICHRA is particularly favored by medium-sized dental practices with 21 to 99 employees.
| Employer size | ICHRA utilization |
| 2 to 20 employees | 15% |
| 21 to 99 employees | 45% |
| More than 100 employees | 39% |
Business services
Group health insurance doesn’t work for every business. Many can’t afford a group health plan due to rising premiums. Even if they currently offer one, a double-digit rate increase could make it impossible to continue. Some employers also struggle to meet a group policy’s minimum participation requirements. With ICHRA, they don’t have to worry about either.
Business services can include:
- Consulting firms
- Public relations
- Marketing
- Event planning
- Property maintenance
According to our findings, businesses with more than 100 employees are more likely to offer ICHRA as an affordable health benefit.
| Employer size | ICHRA utilization |
| 2 to 20 employees | 18% |
| 21 to 99 employees | 33% |
| More than 100 employees | 48% |
Nonprofits
Nonprofits employ 12.8 million individuals3, making up almost 10% of the U.S. private-sector workforce. While they might not have to worry about taxes, nonprofits still have to make each dollar count. With healthcare costs climbing each year, nonprofit professionals working with tight budgets often wonder how they can afford to offer health coverage to their teams. ICHRA is a cost-effective alternative to traditional group health insurance that makes offering competitive health benefits possible.
The nonprofit sector includes:
- Charities
- Relief organizations
- Advocacy organizations
- Educational institutions
- Foundations
Based on our report, larger nonprofits with more than 100 employees heavily rely on ICHRA to provide employee health benefits.
| Employer size | ICHRA utilization |
| 2 to 20 employees | 19% |
| 21 to 99 employees | 21% |
| More than 100 employees | 59% |
How can insurance professionals or employers offer an ICHRA?
The employers mentioned above save valuable time and money by offering an ICHRA through Remodel Health’s ICHRA+ platform. With our team of experts on your side and white-glove service, employers and brokers can easily manage an ICHRA.
We handle:
- Plan design
- Legal plan documents
- AutoPay for employee individual health insurance premiums
- Required ICHRA plan notices
- Providing necessary data for compliance filings
Plus, eligible employees with ICHRA don’t have to worry about navigating the Health Insurance Marketplace on their own. They can shop for individual health insurance plans directly through Remodel Health.
Conclusion
ICHRA allows employers of all sizes to reimburse employees tax-free for individual health insurance rather than offering a one-size-fits-all group health plan. Regardless of whether you’re running a startup or a well-established family business, understanding ICHRA’s potential across various industries can revolutionize your approach to employee health benefits.
- https://www.hracouncil.org/report
- https://www.mercer.com/assets/us/en_us/shared-assets/local/attachments/pdf-2024-us-inside-employees-minds-healthcare.pdf
- https://www.businessinitiative.org/statistics/non-profit/number-in-united-states/
Contact us today to learn more about ICHRA and determine whether it’s a good fit for you or your clients.