Evaluate ICHRA plans before you change your benefits strategy
An Individual Coverage Health Reimbursement Arrangement (ICHRA) lets employers fund employees' individual market coverage with a defined, tax-advantaged contribution. It is a strong option for some employers — and the wrong one for others. We help you tell the difference before you change a thing.
Balanced evaluation
Compare the fit before choosing a path
Group plan
Shared plan and carrier structure
ICHRA
Defined contribution and individual choice
Neither path is the automatic winner; workforce, market, budget, and administration determine fit.
What to know about ICHRA
Durable, verified facts about how ICHRA works, who governs it, and what it requires — drawn from official federal sources.
What ICHRA is
ICHRA is an Individual Coverage Health Reimbursement Arrangement. It lets employers fund employees' individual market coverage with a defined, tax-advantaged contribution.
Who governs it
ICHRA is governed by federal rules set by the IRS, the U.S. Department of Labor, and CMS.
How it works
Employers set a fixed contribution per employee; employees use it to shop the individual market for a plan that fits them.
Employee classes
Federal rules allow certain employee classes — including full-time, part-time, seasonal, salaried or hourly, and employees in the same rating area — subject to class-size and other requirements.
Administration
ICHRA requires a qualified administration partner for reimbursements and compliance. SSGI assesses feasibility and coordinates qualified partners; it is not the reimbursement or claims administrator.
Not a universal winner
ICHRA is not automatically better or lower-cost than a group plan. Fit depends on the individual market, employee classes, contribution design, and administration.
Five factors that decide whether ICHRA wins
Explore each factor to think through whether ICHRA fits your workforce. This is an informational framework — it does not store anything you read and it is not a legal determination.
Who are you covering, and how diverse are their needs?
ICHRA tends to fit best when a workforce spans different life stages, geographies, or coverage needs — and less well when everyone wants the same plan.
- A workforce with varied ages, family sizes, or health needs can benefit from individual choice.
- A workforce that prefers one shared plan and network may prefer a traditional group plan.
- Federal rules allow certain employee classes — including full-time, part-time, seasonal, salaried or hourly, and employees in the same rating area — subject to class-size and other requirements.
This framework is informational and does not store anything you read. It is not a legal determination or a recommendation to adopt ICHRA. Whether ICHRA fits depends on your specific workforce, budget, and market. Request a feasibility review for guidance tailored to your circumstances.
Traditional group plan vs ICHRA
A concise comparison across the dimensions that matter most. Neither path is universally better — the right choice depends on your workforce and goals.
Cost structure
- Traditional group plan
- Defined benefit; employer and often employees share a negotiated premium.
- ICHRA
- Defined contribution; employer sets a fixed, tax-advantaged amount per employee.
Annual cost movement
- Traditional group plan
- Premiums are renegotiated each year and can rise with claims experience.
- ICHRA
- Contributions are set by the employer and held to a budget you control.
Employee choice
- Traditional group plan
- Employees select from the plans the employer offers — usually one or two.
- ICHRA
- Employees use the contribution to shop the individual market for the plan that fits them.
Network & providers
- Traditional group plan
- Network is fixed by the chosen group plan; breadth depends on the carrier.
- ICHRA
- Network depends on the individual plan each employee selects on the marketplace.
Administration
- Traditional group plan
- Carrier handles eligibility, enrollment, and claims; employer manages renewals.
- ICHRA
- Employer coordinates a qualified ICHRA administrator for reimbursements and compliance.
May fit when
- Traditional group plan
- Your workforce wants one shared plan, a carrier-managed experience, and predictable carrier handling of enrollment and claims.
- ICHRA
- Your workforce has varied needs across a strong individual market and values choosing its own coverage.
May not fit when
- Traditional group plan
- Your workforce has varied needs the single plan cannot meet, or the local individual market is strong enough that choice would lower total cost.
- ICHRA
- Your workforce prefers one shared plan, the local individual market is thin or expensive, or your team cannot take on added administration.
An evidence-based approach to outcomes
SSGI evaluates outcomes across cost and funding decisions, administrative workload, employee experience, implementation accuracy, and year-round follow-through. See how we evaluate and share client outcomes.
When ICHRA may deserve evaluation — and when group coverage may remain better
Neither path is a universal winner. ICHRA may deserve a closer look in some situations; a traditional group plan may remain the better choice in others. Use the criteria below to weigh which approach fits your workforce, budget, and market.
When the individual market may serve your workforce well
- Your workforce spans different life stages, geographies, or coverage needs that one group plan cannot meet well.
- The individual market is strong where your employees live, with broad networks that include their preferred providers.
- You want a defined, tax-advantaged contribution you can budget across multiple years instead of negotiating annual premiums.
- Your team can coordinate a qualified ICHRA administration partner for reimbursements and compliance.
When a traditional group plan may remain the better choice
- Your workforce prefers one shared plan and network, and a carrier-managed enrollment and claims experience.
- The individual market is thin or expensive where your employees live, so choice would not lower total cost.
- Your team cannot take on the added administration ICHRA requires, or you want the carrier to handle eligibility, enrollment, and claims.
- Renewal predictability through a single negotiated plan matters more than per-employee individual choice.
Read the ICHRA employer decision guide
For a fuller walkthrough of when ICHRA may deserve evaluation and when group coverage may remain better — including the five-factor framework, contribution design, and compliance — read our employer decision guide.
Want to know whether an ICHRA comparison could change your renewal math? Request a benefits review and we'll start with your numbers.
Request a Benefits ReviewHow an ICHRA review moves forward
A compact path from the first fit question through launch and ongoing support — with licensed people accountable at every step.
- Evaluate fit
- Design contributions
- Confirm requirements
- Coordinate partners
- Launch & support
SSGI coordinates with the ICHRA administration partner and your carriers. We are not the reimbursement administrator ourselves — licensed people stay accountable for every recommendation and decision throughout your review.
Direct answers before the first conversation
These answers explain the decision framework and responsibility boundaries. Carrier availability, rates, eligibility, and recommendations still require a current employer-specific review.
Employee benefits guidance across the Mid-Atlantic
SSGI serves employers across its licensed states. Use these jurisdiction and local-market pages for relevant group health insurance, renewal, administration, ICHRA, and workforce considerations.
- East Coast employee benefitsMulti-state benefits guidance across SSGI's licensed East Coast jurisdictions.
- Mid-Atlantic employee benefitsRegional guidance for multi-state employers.
- Maryland employee benefitsStatewide hub for Maryland county and city markets.
- Pennsylvania employee benefitsState hub for Pennsylvania employer and local-market guidance.
- Delaware employee benefitsState hub for Delaware employer and county guidance.
- Virginia employee benefitsState hub with focused Northern Virginia guidance.
- Washington DC employee benefitsDistrict-specific employee benefits guidance.
- New Jersey employee benefitsStatewide carrier, network, funding, and administration guidance.
SSGI serves employers across its licensed states. Coverage options, carrier rules, and recommendations depend on the employer, workforce, jurisdiction, and current market.
Where to verify ICHRA rules
ICHRA is governed by federal rules set by the IRS, the U.S. Department of Labor, and CMS. These six official resources confirm how ICHRA works — the rulemaking, model notice, model attestation, and agency guidance.
Sources
- IRS — Health Reimbursement Arrangements (HRAs)Internal Revenue Service newsroom page on HRAs, including ICHRA.
- DOL — Individual Coverage HRA Final Rule (1210-AB87)U.S. Department of Labor completed rulemaking establishing the individual coverage HRA.
- DOL — Individual Coverage Model NoticeU.S. Department of Labor individual coverage model notice for employers.
- DOL — Individual Coverage HRA Model AttestationU.S. Department of Labor model attestation for the individual coverage HRA.
- CMS — Health Reimbursement ArrangementsCenters for Medicare & Medicaid Services page on health reimbursement arrangements.
- CMS — Employer InitiativesCenters for Medicare & Medicaid Services employer initiatives, including ICHRA resources.
Last verified
Reviewed by Laura Decker, Vice President, Strategic Sequoia Group Inc. .
This page is informational and does not constitute legal, tax, or actuarial advice. ICHRA design and compliance depend on your specific circumstances. Consult qualified counsel and a tax advisor before adopting or modifying any health reimbursement arrangement. For more employer-facing background, browse the Employer Benefits Resource Center.
Request an ICHRA Feasibility Review
We'll show you where ICHRA fits, where it does not, and what the numbers mean for your workforce.
