ICHRAs Are on the Rise. Here’s What You Need to Know About This New Coverage Option

Employer-sponsored health care coverage is one of the best reasons to work for someone else. (Just ask any freelancer or solopreneur.)

But health insurance coverage is expensive for everyone — including employers. That’s one reason Individual Coverage Health Reimbursement Arrangements (ICHRAs), are on the rise.

ICHRAs can simultaneously offer employees more agency in coverage choice while also keeping costs more predictable for business owners. However, they have drawbacks, too. For instance, access to certain types of coverage may be more limited, depending on where you live and what kind of health care you need. Having an ICHRA may also change your eligibility for premium tax credits you’d otherwise have qualified for.

Here’s a closer look at what you need to know about this new — and trending — coverage option.

What are ICHRAs — and why are they becoming more common?

ICHRAs were invented during Trump’s first presidency, allowing employers to offer reimbursements for employees’ qualified medical expenses. These include premiums paid toward health insurance they purchase individually, usually through the ACA Marketplace, also known as Obamacare.

In other words, under an ICHRA, you’re responsible for choosing and purchasing your own health insurance, rather than enrolling in the group plan chosen by the company. Instead of having the subsidized part of your premium deducted from your paycheck, you’d receive a reimbursement after paying for it yourself.

In addition, because your health insurance policy wouldn’t be obtained through your employer, you’d be able to retain the plan — though not the reimbursement — even if you moved on from your job.

While specific estimates vary, the HRA Council (an organization focusing on individual health coverage options) reports that, at the most, a million people have access to this kind of health insurance — a vanishingly small fraction of the 165 million total workers with any kind of employer-sponsored coverage. The number of employers offering such plans increased 29% from 2023 to 2024. In addition, adoption has increased more than 50% among small employers from 2024 to 2025, particularly those who’ve been contributing their information to the Council’s reports since the ICHRA’s inception.

What to know if your company offers an ICHRA

If your company decides to offer an ICHRA, you’ll be able to enjoy the full range of health care options available on the Marketplace. This may give you more autonomy and flexibility when it comes to choosing a plan that fits your specific coverage needs.

However, it can also be more difficult to find plans that are as inclusive as group health plans traditionally offered by employers — or, if you do, you may find that the premium prices are quite high. There’s no specific annual minimum or maximum your employer has to contribute to the ICHRA, so your out-of-pocket costs will vary a lot depending on the coverage you choose and your employer’s chosen reimbursement strategy.

As always, when choosing a plan, be sure to familiarize yourself with what — and who — is covered. The Marketplace makes it easy to filter for specific providers and medications, so you can ensure continuation of care. Comparing quotes can help you understand what your regular, recurring costs will be, as well as estimating costs of specific care protocols.

Just be aware that your employer’s reimbursement can impact your eligibility for the premium tax credits that can make health insurance more affordable for many Americans. If you have more questions, contact your HR representative directly.