Employers Shift Health Insurance Decisions to Workers
A growing number of employers are adopting Individual Coverage Health Reimbursement Arrangements (ICHRAs), giving workers the power to choose their own health insurance plans. This approach is gaining traction, particularly among small businesses that struggle to afford traditional group insurance plans.
ICHRAs allow employers to contribute to employees’ health insurance costs while letting workers choose their own plans from the individual insurance market. This model provides several benefits, including predictable costs for employers and more tailored coverage for employees. Companies like Taro Health are using ICHRAs to offer employees a range of options, with contributions varying based on age and family size.
How ICHRAs Work
Under ICHRA arrangements, employers hire outside firms to help employees navigate the individual insurance market and select suitable plans. This approach differs significantly from traditional employer-sponsored health insurance, where companies typically offer one or two group plans.
The ICHRA model has been gaining popularity since its introduction during the Trump administration. Enrollment has been increasing steadily, with the HRA Council reporting a 50% growth in 2025, bringing the total number of people covered through these arrangements to approximately 450,000.
Benefits and Drawbacks
ICHRAs offer several advantages, including:
- Predictable costs for employers
- More tailored coverage options for employees
- Portability of coverage, allowing employees to maintain their insurance even if they change jobs
However, there are also challenges associated with ICHRAs:
- Health insurance plans on the individual market often have narrower provider networks
- Employees may find it overwhelming to navigate the various plan options and terms
- Employers must provide adequate support to help workers make informed decisions
Future Growth
Several factors could drive further adoption of ICHRAs:
- Rising healthcare costs, prompting more employers to seek cost control measures
- Potential tax incentives through proposed legislation
- Expiration of enhanced government subsidies for Affordable Care Act marketplace plans, making ICHRAs more attractive to employees
As healthcare costs continue to evolve, ICHRAs may become an increasingly important option for employers seeking to provide health insurance benefits while managing their expenses.
