The ICHRA Moment Is Here — Are You Ready for It?

The ICHRA market isn’t just having a moment — it’s gaining maturity. 

While new startups and investors are only now waking up to the opportunity, thousands of businesses are already offering flexible, portable health benefits to employees through Individual Coverage Health Reimbursement Arrangements. Forward-thinking employers are turning away from rigid group plans and embracing a model that aligns better with today’s workforce — and policymakers are taking notice.

State legislatures in Georgia, Ohio, and Texas are all weighing new bills that would deliver tax credits for businesses who contribute to ICHRAs for their employees. This is an exciting — and overdue — moment for U.S. healthcare.

ICHRA, for those unfamiliar, is an emerging model where employers set a monthly allowance that employees use to purchase insurance on the individual market. The arrangement, built off President Obama’s 21st Century Cures Act but expanded through executive order by President Trump, allows employers to control their healthcare costs rather than insurance companies. For employees, ICHRA means they can choose the plan that best matches their health needs and budget, rather than a one-size-fits-all group plan. 

A decade on from the Affordable Care Act, more than 24 million Americans purchase their healthcare on the individual market. ICHRA is surging in popularity as an option for employer-sponsored insurance to access the individual market, as employers rethink traditional group plans with unpredictable renewal rates and employees seek personalized healthcare. 

Let’s take a closer look at why investors and politicians are eyeing ICHRA. 

A wave of bills to boost benefits

Healthcare costs are soaring throughout the United States. A new Gallup poll found that one in 10 U.S. adults — equivalent to nearly 29 million people — have recently been unable to afford or access quality healthcare. The crisis will only be exacerbated by tariffs on medical devices and supplies. 

Lawmakers in several states are trying to expand access to healthcare for employees of small businesses — many of whom do not currently provide insurance — by granting significant tax relief to businesses who offer health reimbursement arrangements to their employees.

In Georgia, House Bill 341 proposes a tax credit for businesses with 100 or fewer employees who contribute to ICHRAs for their employees. The Ways and Means Committee in Ohio is currently weighing House Bill 133, which would authorize a similar tax credit for businesses with 50 or fewer staff. A third piece of pro-ICHRA legislation, SB 1949, is working its way through the Texas Senate. In each case, supporters aim to expand access to healthcare through ICHRA. 

These proposals are following the lead of Indiana’s Health Care Matters bill, signed into law in 2023, which offers a tax break for businesses with fewer than fifty employees that provide health benefits through ICHRA. Employers can claim up to $400 per employee for the first year and $200 per covered employee in the second year.

“By incentivizing employers to adopt ICHRAs, we can help reduce healthcare costs, enhance employee satisfaction, and ultimately incentivize more health care choice in the economy,” said Ohio Rep. Meredith Craig.

Small business considerations

Small businesses aren’t waiting for legislation, they’re already leading the way. Thousands have ditched bloated group plans for a modern, flexible model that puts employees in the driver’s seat. ICHRA isn’t just a workaround — it’s a strategic advantage.

It’s worth noting that the transition from a group plan to ICHRA is a significant shift — one that requires careful planning and proactive communication with employees. ICHRA places the onus for purchasing an insurance plan on individuals, rather than the HR team, so companies need to choose the right partner and technology platform to ensure the transition is seamless. And that partner should be able to support employers through every phase, not just open enrollment. 

The wave of proposed legislation — as well as new VC investment — has attracted a pack of new startups to the ICHRA space. As employers prepare for open enrollment in 2025, HR and finance leaders should look beyond buzz or valuation for an ICHRA partner that gives employees a full range of plan choices and robust support. 

Even though the practice of reimbursing employees for health insurance is well established, ICHRA is relatively new. These benefit plans are only going to improve as more people join the individual market, expanding the risk pool and reducing the cost of plans. 

A movement made to last

The ICHRA space is heating up. That’s great news for businesses who understand the importance of good benefits for retention, and for employees who want to choose a healthcare plan that best suits their family’s needs — and take it with them to their next employer. 

This moment wasn’t luck — it was built. The foundation for ICHRA has been laid by years of hard-earned progress, and it’s finally being recognized. As the market heats up, one thing is clear: employees and employers deserve more than hype — they deserve better healthcare, smarter benefits, and partners who know what they’re doing.

Photo: cat-scape, Getty Images

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