Short answer: ICHRA lets employers give workers a defined, tax-free dollar amount to buy their own individual coverage instead of running a group plan. Adoption has grown about 1,000% since 2020, recently roughly +34% a year among larger employers and +52% among smaller ones, pushed by steep group renewals and the end of enhanced subsidies.
An Individual Coverage HRA (ICHRA) flips the model: instead of choosing one group plan, the employer sets a budget and reimburses employees tax-free for individual-market coverage. That gives employers cost predictability and employees choice.
Adoption has accelerated dramatically: the HRA Council has reported roughly 1,000% growth since ICHRAs launched in 2020, with recent year-over-year increases around 34% among employers with 50+ employees and 52% among smaller ones, and high employer retention.
The drivers: double-digit group renewals make a fixed-dollar approach attractive, and the expiration of enhanced subsidies reduces the downside of steering employees to the individual market. Legislation (the proposed “CHOICE Arrangement”) would write ICHRA into statute, but employers don’t need to wait; the rules have been in effect since 2020.
Sources
- HRA Council adoption reports (2025); Employee Benefits KB (Tax-Advantaged Accounts, ICHRA).
Content history
Originally published: June 16, 2026
Last reviewed: June 16, 2026