ICHRA
—
Individual
Coverage
Health
Reimbursement
Arrangement
—
seems
to
be
the
new
buzzword
of
2025.
ICHRAs
allow
employers
to
provide
their
employees
pre-tax
dollars
to
cover
the
cost
of
individual
health
insurance
premiums
and
qualified
medical
expenses.
They
were
created
under
the
first
Trump
administration
in
2019
and
became
available
in
2020.
According
to
the
HRA
Council
—
an
advocacy
organization
for
Health
Reimbursement
Arrangement
administrators
and
more
—
ICHRA
adoption
rose
29%
between
2023
and
2024
among
the
organization’s
members
(though
it’s
difficult
to
say
for
sure
how
many
employers
are
offering
them).
Multiple
startups
that
help
employers
administer
ICHRAs
have
also
recently
gained
funding,
including
StretchDollar
and
Remodel
Health.
The
interest
in
ICHRA
stems
from
dissatisfaction
with
traditional
group
health
insurance.
The
general
consensus
among
those
interviewed
for
this
article
appears
to
be
that
these
plans
present
employees
with
more
choice,
but
at
least
one
employer
advocate
views
them
as
merely
a
temporary
fix
to
a
broken
healthcare
system.
“They
are
a
Band-Aid
that
addresses
a
symptom
that
will
have
no
positive
systemic
benefit,
in
my
view,”
said
Elizabeth
Mitchell,
president
and
CEO
of
Purchaser
Business
Group
on
Health.
“For
reasonably
healthy
people
with
low
healthcare
costs,
I
can
see
why
it
would
be
attractive,
and
maybe
for
some
populations,
it
does
make
sense.
But
we
still
have
to
solve
quality
and
affordability
for
the
system
at
large.”
How
do
ICHRAs
work?
The
creation
of
ICHRAs
came
after
the
launch
of
another
insurance
option
for
employers
with
an
even
longer
acronym:
Qualified
Small
Employer
Health
Reimbursement
Arrangements
(QSEHRA).
QSEHRA
was
created
in
2016
by
the
Obama
administration
and
allowed
small
businesses
with
fewer
than
50
full-time
employees
to
offer
pre-tax
funds
to
their
employees
to
purchase
health
insurance
plans.
However,
there
were
limits,
including
how
much
they
can
offer
and
it
only
applied
to
small
businesses.
So
the
Trump
administration
created
ICHRAs
in
2019,
permitting
employers
of
any
size
to
provide
a
pre-tax
fixed
benefit
of
no
limit
to
their
employees.
And
there
are
several
reasons
why
ICHRAs
have
become
attractive
to
employers,
particularly
small
employers,
according
to
Robin
Paoli,
executive
director
of
the
HRA
Council.
For
small
employers,
it
mostly
has
to
do
with
rising
healthcare
costs,
which
have
made
it
increasingly
difficult
for
them
to
offer
health
insurance.
But
for
larger
employers,
ICHRAs
give
them
more
flexibility
and
allow
their
employees
to
choose
the
plan
that
best
suits
their
needs,
such
as
a
plan
offered
by
their
preferred
carrier,
one
that
covers
their
preferred
hospital
or
a
plan
that’s
tailored
to
a
specific
condition.
With
group
insurance,
employees
at
a
4,500-person
company,
for
example,
may
only
have
a
handful
of
plans
to
choose
from.
When
employers
offer
an
ICHRA,
they
are
able
to
separate
their
employees
into
different
classes,
such
as
full-time
employees,
part-time
employees
or
by
different
geographic
areas,
for
instance.
Then
they
decide
what
amount
each
employee
class
will
receive.
Reimbursements
can
be
increased
for
older
employees
and
those
with
more
dependents.
Employees
can
then
purchase
individual
health
insurance
through
a
provider,
through
the
ACA
exchange
or
even
Medicare,
if
eligible.
They
can
use
the
funds
for
qualified
medical
expenses,
like
to
diagnose,
treat
and
prevent
a
disease.
It’s
important
to
note,
however,
that
while
employers
can
offer
one
class
of
employees
an
ICHRA
plan
and
another
class
a
group
health
insurance
plan,
they
cannot
offer
both
to
one
class
at
the
same
time.
For
example,
a
business
can
give
full-time
employees
group
health
insurance
and
part-time
employees
an
ICHRA,
but
full-time
employees
can’t
be
offered
both
group
health
insurance
and
an
ICHRA.
While
small
employers
have
been
the
biggest
adopters
of
ICHRA,
large
employers
are
the
fastest-growing
cohort,
HRA
Council’s
data
shows.
An
executive
at
a
tech-enabled
insurance
company
that
has
been
a
major
advocate
of
ICHRA
agreed
that
there
is
increased
interest
among
large
employers.
Louis
DeStefano,
senior
vice
president
of
growth
at
Oscar
Health,
anticipates
seeing
large
employers
test
out
ICHRA
plans
with
certain
subsets
of
their
population
first,
such
as
those
in
geographic
regions
with
good
ACA
plans.
“I
don’t
think
you’re
going
to
see
a
100,000-life
employer
move
their
entire
population
tomorrow
to
ICHRA,
but
I
think
they
are
asking
the
questions
and
trying
to
understand
what
pieces
of
their
population
this
could
serve
the
best,”
he
said.
However,
administering
ICHRA
plans
may
be
confusing
to
employers,
and
choosing
a
plan
on
the
ACA
exchanges
could
be
burdensome
to
employees.
That’s
where
startups
like
Thatch,
StretchDollar
and
Take
Command
are
coming
into
play.
These
companies
help
educate
brokers
and
employers
on
ICHRA,
as
well
as
assist
them
in
setting
up
ICHRA
plans
for
their
employees.
They
also
help
employees
shop
for
the
right
health
plans
for
them.
“On
the
educational
front
there
is
still
much
work
to
be
done,”
said
Kyle
Estep,
senior
vice
president
of
strategy
at
Take
Command.
“Job
one
has
been
to
educate
insurance
agents
and
large
brokerage/consulting
firms
in
the
employee
benefits
space.
These
folks
drive
the
market.
In
addition,
we
are
still
in
the
early
days
of
building
traction
with
HR
&
finance
professionals
that
sit
at
the
decision-making
table.”
Are
ICHRAs
beneficial
to
employers
and
employees?
The
main
benefit
of
ICHRAs
for
employees
is
that
it
provides
them
with
choice.
For
example,
someone
who
has
diabetes
can
choose
a
plan
that
fits
that
need,
or
a
Spanish-speaking
individual
can
select
a
plan
that
caters
to
that
language.
DeStefano
equated
it
to
the
transition
from
pensions
to
401Ks.
“You’re
putting
the
power
back
into
the
employees,”
he
said.
“And
I
think
what’s
so
telling
about
ICHRA
is
that
three
plans
for
a
large
employer
doesn’t
really
fit
the
needs
of
all
their
families.
…
Everything
we
buy
in
this
country,
we
have
tons
of
choices.
We
just
came
out
of
the
holidays
and
there
was
an
unlimited
amount
of
choices
for
what
we
would
purchase,
but
I
can’t
do
that
with
my
healthcare
plan.
I
think
that’s
really
the
shift,
and
I
think
that’s
why
in
the
long
term,
it’ll
be
successful.”
Another
benefit
is
that
people
can
potentially
keep
their
plan
even
if
they
leave
their
employer,
versus
traditional
insurance
in
which
employees
lose
their
coverage
after
leaving
their
job,
according
to
Christina
Farr,
managing
director
at
consulting
firm
Manatt
Health.
Still,
employees
need
to
be
sophisticated
to
shop
for
their
needs
and
in
that
sense
ICHRAs
place
a
heavy
burden,
argued
Mitchell
of
PBGH.
“Choosing
a
health
plan
or
choosing
a
health
system
is
Byzantine
and
incredibly
challenging
to
compare
and
to
understand,”
she
said.
“The
entire
problem
with
U.S.
healthcare
is
it
is
an
absolutely
dysfunctional
non-market,
where
there’s
no
information,
there’s
no
way
to
compare
quality
or
cost,
there
is
almost
no
way
to
even
get
an
appointment
half
the
time,
and
that’s
when
you
are
part
of
a
larger
group.
…It
is
not
a
fair
thing
to
ask
a
consumer
to
navigate
an
unnavigable
system.”
In
a
recent
LinkedIn
post,
another
healthcare
expert
questioned
whether
ICHRAs
actually
give
employees
access
to
quality
healthcare.
“I
really
wonder
if
any
of
these
ICHRA
evangelists
have
ever
bought
an
individual
health
plan?”
said
Ari
Gottlieb,
principal
of
consulting
group
A2
Strategy
Corp.
“What
they
would
find,
generally,
are
plans
that
have
Medicaid-based,
limited
provider
networks,
with
most
lacking
out-of-state
coverage
and
excluding
leading
health
systems.”
Paoli
of
HRA
Council
did
note
that
while
she
believes
ICHRAs
work
for
a
variety
of
consumers,
she
can
see
why
someone
with
complex
conditions
may
prefer
receiving
coverage
through
traditional
group
insurance.
That
said,
she
thinks
ICHRA
works
for
the
majority
of
people
because
it’s
ACA-compliant
insurance.
The
benefits
to
employers
are
much
clearer.
To
them
—
especially
smaller
businesses
—
ICHRAs
offer
the
potential
to
lower
healthcare
costs,
believes
Molly
Chidester,
deputy
director
of
health
care
innovation
at
Morgan
Health,
a
business
unit
of
JPMorgan
Chase
focused
on
employer-sponsored
insurance.
“Rising
health
care
costs
are
especially
burdensome
for
small
and
mid-size
businesses
and
ICHRAs
could
potentially
help
alleviate
that
impact
–
particularly
in
states
where
the
individual
market
is
competitively
priced
relative
to
group
plans,”
Chidester
said.
“ICHRAs
make
health
care
costs
more
predictable
and
have
helped
some
small
businesses
offer
health
benefits
for
the
first
time.”
However,
Mitchell
doesn’t
entirely
agree
that
ICHRAs
will
have
a
meaningful
impact
on
healthcare
costs
for
employers.
“My
question
about
ICHRAs
is,
what
do
people
think
will
hold
costs
down
with
an
ICHRA?”
she
argued.
“If
jumbo
companies
spending
literally
billions
of
dollars
a
year
are
challenged
to
negotiate
lower
costs,
how
would
an
individual
with
a
defined
amount
of
cash
do
that?
So
it
might
be
a
nice
short-term
off
ramp,
but
there
is
no
mechanism
that
would
actually
drive
affordability
or
have
any
downward
pressure
on
costs.”
In
other
words,
by
putting
the
responsibility
on
the
employee
to
pick
health
plans,
it’s
giving
up
the
bargaining
power
that
employers
have
with
health
systems
and
insurers.
That
said,
this
argument
mainly
applies
to
large
self-funded
employers,
as
small
employers
don’t
have
a
lot
of
negotiating
power.
While
it’s
difficult
to
say
just
how
many
employers
are
turning
to
ICHRAs
as
there
is
no
reporting
requirement,
Paoli
anticipates
adoption
to
continue
to
increase.
The
evidence
is
clear
from
market
trends.
“Investors
are
very
interested
in
companies
that
are
administrating
and
implementing
and
enrolling
ICHRAs,
and
more
and
more
insurance
companies
are
hiring
and
training
staff
in
the
rules
and
regulations
around
ICHRA
and
QSERHA
and
HRAs
generally,”
she
said.
“With
the
insurance
companies
doing
that
and
with
investors
being
interested,
you
know
that
a
bunch
of
employers
are
making
this
move.”
Photo:
sdecoret,
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