An ICHRA lets an employer of any size reimburse employees tax-free for individual-market health insurance premiums (and often other medical costs) instead of offering a traditional group plan. Employees must be enrolled in qualifying individual coverage or Medicare, verified monthly.
Individual Coverage
Individual Coverage HRAs (ICHRA), QSEHRAs, and other ways employers can help employees buy their own individual health insurance instead of offering a traditional group plan.
ICHRA vs. QSEHRA: which one fits my business?
A QSEHRA is only for employers with fewer than 50 FTEs and no group plan, has statutory dollar caps, and is not an ERISA plan (no COBRA). An ICHRA is for employers of any size, has no dollar cap, allows up to 11 employee classes, can run alongside a group plan for other classes, and IS an ERISA group health plan.
How does an ICHRA or QSEHRA affect an employee’s premium tax credit?
If the HRA offer is “affordable,” it blocks the premium tax credit: the employee takes the HRA instead. If it’s unaffordable, the employee may opt out and keep the PTC. A QSEHRA also reduces the PTC dollar-for-dollar, while an ICHRA is all-or-nothing.
Why is ICHRA adoption growing so fast?
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.