What is ICHRA?
Individual Coverage Health Reimbursement Arrangement
An Individual Coverage Health Reimbursement Arrangement (ICHRA) represents a major shift away from the traditional defined benefit model — where an employer selects a single group health plan for everyone — to a defined contribution strategy instead. With an ICHRA, employers set a fixed, tax-free monthly allowance for each employee to buy their own individual health insurance. This empowers employees to choose plans that truly fit their needs and budgets. The result is greater flexibility for workers and more cost control and predictability for employers.
How it works:
- Employers don’t choose the plan — instead, they set a fixed, tax-free monthly reimbursement allowance for each employee.
- Employees take control — they shop for and buy their own individual health insurance plan through the ACA Marketplace.
- Reimbursement made simple — employees submit proof of premium payments and are reimbursed up to their allowance amount. A third party typically handles administration and compliance.
This model moves employers out of the business of picking health plans and into the role of a financial supporter, empowering employees to choose coverage that fits their needs.
How ICHRA Differs from Traditional Group Insurance
Traditional Group Plan | ICHRA (The New Model) |
Employer selects one or more group plans for everyone | Employer sets a defined dollar allowance; employees choose any plan they want |
Premiums are based on the group’s collective risk | Premiums are based on each employee’s age, location, and plan choice |
One-stage group quote | Two-stage quoting: employer contribution first, then each employee’s plan |
All employees in a class share the same plan options | Employers can set different allowances for different employee classes (e.g., full-time vs. part-time) |
Managed under a single group master policy | Employees enroll individually into separate plans |
Why Employers Choose ICHRA
Predictable Budgets — Replace unpredictable group premiums with a fixed monthly contribution, eliminating surprise renewal hikes.
Strategic Flexibility — Tailor contribution amounts for different classes of employees to align benefits with your workforce structure.
Cost Savings — Many employers see significant savings compared to traditional group plans.
Less Hassle — No more selecting or managing a one-size-fits-all plan. Let employees pick what’s best for them.
Why Employees Love ICHRA
Personalized Plans — Employees choose coverage that fits their unique health needs, preferred doctors, and budget.
Portability — The plan belongs to the employee, not the company. If they change jobs, their coverage goes with them.
Financial Freedom — A tax-free allowance lets employees decide how much to spend — they can upgrade or save.
Transparent Benefits — The employer’s contribution is clear and defined, making the benefit easy to understand.
What It Means for Agents
Working with ICHRA is a different ballgame compared to traditional group insurance. Agents must:
- Manage Complex Quotes — Structure employer allowances and quote individual plans for every employee.
- Navigate Classes — Design and manage employee “classes” to stay compliant and strategic.
- Coordinate Data — Gather census data and help each employee enroll individually.
- Work with Third Parties — Partner with administrators for reimbursement and compliance management.
- Support Mass Enrollment — Guide employees through individual enrollments with multiple carriers.
Handle Annual Renewals — Facilitate ACA Open Enrollment renewals each year.
The Bottom Line
ICHRA gives employers predictable costs, employees greater choice, and agents a powerful new market — with the right tools to make it work.
ICHRA Masters puts that power in your hands.
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