By Healthcare Brew Staff
less than 3 min read
Definition:
An individual coverage health reimbursement arrangement (ICHRA) is an agreement where employers give workers money to buy whatever insurance plan works for them and their family on the individual market. The reimbursement can also be used to pay for certain qualifying medical expenses if the employer allows.
How it’s going
The Trump administration created ICHRAs in 2019, and they became available in 2020.
Trade and advocacy organization the HRA Council estimated employers offered ICHRAs to at least 260,000 employees in 2025, though they believe this to be an underestimate.
Employers who have started offering ICHRAs told us this gives them more predictable healthcare costs year to year compared to group insurance. The cost savings of an ICHRA depends on the health of the individual insurance market, however.
Companies in this space such as insurance carrier Oscar Health have rolled out ICHRA-specific health plans and features like online enrollment platforms to make these offerings more tempting.
Getting déjà vu?
Employers were previously allowed to directly reimburse employees for health insurance, tax-free, from 1961 until the IRS pulled back that rule in a 2013 notice on the basis that the practice violated the Affordable Care Act, which prohibits annual limits for essential health benefits.
A similar program, qualified small employer health reimbursement arrangements (QSEHRA), launched on Jan. 1, 2017, to certain small employers with fewer than 50 full-time equivalent employees.
These are just a few of several alternative health coverage models that companies and consumers are testing out. Experts predict their uptake will increase as healthcare costs continue to rise.
