The mechanics
What an ICHRA actually is
An Individual Coverage Health Reimbursement Arrangement allows an employer to reimburse employees, tax-free, for individual health insurance coverage they purchase themselves — instead of sponsoring a traditional group health plan.
The employer sets a monthly reimbursement amount, which may vary by permitted employee classes and by family size and age within the rules. Employees choose their own plan on the individual market and are reimbursed up to that amount. The employer's cost is the amount they chose to fund.
ICHRA was created by federal rules issued in 2019 and available to employers beginning in 2020. It is not a workaround or a gray area — it is an established arrangement with defined compliance requirements.
Because ICHRA involves tax, ERISA, ACA affordability, and notice requirements, employers should confirm the specifics with qualified tax and legal counsel before adopting one. We are not attorneys or tax advisors.
You trade control of the plan for control of the cost
In a group plan, you control the plan design and the carrier absorbs the variability — then hands it back at renewal. In an ICHRA, you control the spend and the employee controls the plan. Whether that is an upgrade depends almost entirely on your workforce.
Where it works well
Six situations where ICHRA is worth serious evaluation
Budget predictability
You set the contribution. There is no renewal increase to absorb, because there is no group rate. For an employer who has absorbed several consecutive double-digit renewals, this is the headline.
Employee choice
Instead of one plan chosen for everyone by committee, each employee selects the network, deductible, and premium that fits their own family and their own doctors.
Remote employees
A group network built for Southern New Hampshire serves an employee in Arizona poorly. With ICHRA, that employee buys coverage where they actually live.
Seasonal workers
Permitted employee classes allow different treatment for seasonal and part-time staff, which is difficult to accomplish cleanly inside a single group plan.
Financial control
Benefits spend becomes a decision rather than a consequence. You can increase the contribution deliberately in a good year rather than being told what it will be.
Mixed workforces
Employers with several distinct groups — salaried, hourly, seasonal, remote — can use classes to fund each appropriately instead of averaging everyone into one compromise.
Be honest about this part
What to work through before you commit
Compliance considerations
- Written notice to employees within required timeframes
- Substantiation that each employee actually has individual coverage
- Permitted employee class rules — you cannot draw the lines wherever you like
- ACA affordability analysis, which affects employer shared-responsibility exposure for applicable large employers
- Interaction with the premium tax credit — an affordable ICHRA offer makes an employee ineligible for subsidies
- ERISA, COBRA, and reporting obligations that do not disappear
Confirm all of the above with your own tax and legal counsel. This page is educational.
Employee experience considerations
- Individual market network breadth in New Hampshire is not the same as a group PPO — check Massachusetts and Boston access carefully
- Employees must actively shop, which some will find empowering and others will find stressful
- Without good enrollment support, ICHRA can feel like a benefit being taken away
- Family coverage math varies widely by household — some employees do better, some worse
- Employees who currently see a specific specialist need to verify that plan by plan
The cross-border network question is the one that decides ICHRA in this region.
Want ICHRA modeled against your current plan?
We will compare your current group cost, an ICHRA-funded scenario, and what your employees would actually be able to buy in the New Hampshire individual market — including cross-border network access.