Short answer: A taxable health stipend is simple; extra taxable cash employees can use for coverage, but it’s taxed for both sides and doesn’t satisfy the employer mandate. An ICHRA reimburses individual coverage tax-free and can satisfy the mandate, so it’s usually the better structured option.
A health stipend (just adding taxable dollars to a paycheck) is the easiest path: no formal plan, employees spend it however they want. But it’s taxable income (income and payroll taxes for the employee, payroll tax for the employer), it doesn’t count as an offer of coverage for the ACA employer mandate, and it can’t require proof the money buys insurance. An ICHRA, by contrast, reimburses employees tax-free for individual coverage, can be designed by employee class, and counts as an offer of coverage. For most employers wanting to fund individual coverage, an ICHRA (or QSEHRA for the smallest firms) is more tax-efficient and compliant than a stipend.