How recent policy could impact ICHRAs

An individual coverage health reimbursement arrangement (ICHRA) is an atypical way to cover health costs with a bold pitch.

Instead of offering a traditional group plan, employers give workers money before tax to buy whatever insurance plan works for them on the individual market, paying more or less depending on what they need. Think health insurance à la carte.

The idea is to give workers more freedom and give employers more predictable healthcare costs.

“It gets [employers] out of a one-size-fits-all mentality of picking a plan or a set of plans for all employees,” Zachary Sherman, managing director at public healthcare-focused research and consulting firm Health Management Associates, told us.

The concept first soft-launched to employers with 50 or fewer workers in 2017 with qualified small employer health reimbursement arrangements (QSEHRAs). ICHRAs then stretched health reimbursement arrangements to employers of all sizes in 2020 after an executive order by President Donald Trump.

While there’s no comprehensive public enrollment data, employers reportedly offered ICHRAs to 200,000+ employees and their dependents in 2025, according to data from 15 ICHRA/QSEHRA service providers collected by trade and advocacy organization the HRA Council. Uptake hasn’t been explosive, but the data shows it’s risen 19% overall since 2020 and 34% among large employers (50+ employees).

“It felt like, if one big employer took a leap, others might follow. But we hadn’t reached that point,” JoAnn Volk, co-director of Georgetown University’s Center on Health Insurance Reforms, told us.

Now some experts say health reimbursement arrangements might be about to hit a new set of speed bumps, just as the race against group plans was getting interesting.

“The whole premise of an HRA is based on having a robust, healthy individual market, and that’s no longer assured. It’s very much at risk,” Volk said.

The speed bumps

Experts told us changes proposed in July’s One Big Beautiful Bill Act and June’s Marketplace Integrity and Affordability Final Rule might make it more expensive and difficult to sign up for individual coverage, potentially keeping ICHRAs from living up to the hype.

People with lower medical costs may decide individual insurance isn’t worth the hassle, Volk said.

“The people who will persevere are the ones who say ‘I need this coverage no matter what it costs me, and no matter how many hoops I have to jump through,’” Volk said.

If those who choose to keep their health insurance coverage are sicker and use their coverage more, payers may raise premiums or cut everyone’s benefits to compensate.

A July 18 analysis from nonpartisan health policy research group KFF predicts the average out-of-pocket payment will rise 75% for people who use Healthcare.gov or state-based marketplaces. Enrollment is currently at a record 24 million, though that number could drop by more than 11 million based on actuarial group Wakely’s analysis of an earlier version of July’s bill. Among the changes:

• Automatic re-enrollment ends starting in plan year 2028.
• The open enrollment window shortens by two weeks beginning in plan year 2027.
• Stricter eligibility verification requirements for the premium tax credit will be effective in plan year 2028.
• There’s no extension of pandemic-era enhanced premium tax credits, which are set to expire at the end of the year.
• The minimum percent ACA-regulated plans must contribute toward patients’ costs lowers beginning in plan year 2026 (aka more cost-sharing for patients).

For ICHRAs to work, “there needs to be a healthy, robust, and vibrant individual market of ACA plans. And so, any actions that move us away from that don’t further that goal,” Josh Schultz, strategic engagement manager of Softheon, a healthcare technology company that provides enrollment, billing, and payment solutions to health plans and government agencies, told us.

The final version of the One Big Beautiful Bill also removed an earlier provision that would have codified ICHRAs and given $100 monthly tax credits to participating small employers.

Wait, it gets wonkier

Volk specifically pointed to one clause buried in the June marketplace rule that lowers the share of patient costs an ACA-regulated plan must cover, effective 2026.

This matters for ICHRAs because it has long been law that large employers must contribute a minimum to their employees’ health reimbursement arrangements in order for coverage to be considered “affordable”—otherwise, they’re fined. That minimum is calculated for each employee using, in part, the cost of the lowest-cost standard silver-tier plan on the marketplace that year.

So if silver plans cover less, employers can contribute less, which shifts more of the financial burden of premiums and out-of-pocket costs to employees.The rule’s text argues this could increase ICHRA adoption, making large employers more willing to get on board because it would be cheaper for them.

Still bullish?

ICHRA fans are all on board.

Alan Silver, president of Centene’s ICHRA offering, said he views this model as “the future of employer-sponsored healthcare” in a statement to Healthcare Brew, echoing a similar remark by Centene CEO Sarah London in a February earnings call. As of March 31, Centene touts nearly 28 million managed care members, of which people in ICHRAs make up a small portion.

Louis DeStefano, SVP of growth at insurer Oscar Health—which, according to DeStefano, has just under 2 million members primarily in the individual exchange marketplace—said he hopes Oscar can become “one of the leaders” in the ICHRA market.

He argues ICHRA is attractive because of its ability to really individualize insurance—the insurer has plans specifically for people with diabetes, for instance.

DeStefano added it’s possible that Trump or Congress might eventually extend premium tax credits or take other actions to otherwise incentivize ICHRA growth.

“The administration remains supportive of ICHRAs as a means to efficiently strengthen the individual market and expand employee insurance choices for small businesses. President Trump made meaningful progress during his first term to expand ICHRAs, and we are committed to building off that progress,” White House spokesperson Kush Desai told us.