ICHRA (Individual Coverage Health Reimbursement Arrangement)
A benefit structure where an employer gives each employee a fixed monthly allowance to buy their own individual health insurance policy, instead of offering one group plan.
An ICHRA flips the traditional group health model. Rather than the employer choosing a single plan (or a handful of plans) for everyone, the employer sets a monthly reimbursement allowance — often varying by employee class, age, or family size — and each employee shops for their own individual-market policy using that allowance.
Why employers consider it: predictable, capped monthly costs; no renewal-cycle plan selection; and the ability to offer coverage to a geographically spread-out or highly varied workforce without maintaining one group plan that has to fit everyone.
What it changes for employees: they gain choice over their own carrier and plan design, but they take on more responsibility for shopping the marketplace — which is where a broker’s guidance matters most.
Where it fits: ICHRA tends to get evaluated alongside level-funded and fully insured group plans, especially by employers facing steep renewal increases or a workforce spread across many states. It isn’t automatically cheaper or better — the right call depends on workforce demographics, local individual-market plan quality, and how much administrative lift the employer wants to take on.
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Have questions about how this applies to your renewal?
Talk to a group health insurance broker who specializes in your situation.