Rising Demand for Individual Coverage Health Reimbursement Arrangements (ICHRAs)

The demand for Individual Coverage Health Reimbursement Arrangements (ICHRAs) is rising, as more than half of brokers now recommend or implement this innovative benefits strategy. According to SureCo's "2026 State of ICHRA Report," ICHRAs are poised to become mainstream, with insights drawn from 1,500 HR professionals, employees, and benefit consultants. Introduced in 2020, ICHRAs enable employers to offer tax-free reimbursements that employees can use to purchase individual health insurance plans and cover qualified medical expenses.

Smaller businesses and those previously providing no coverage have been quick adopters, using ICHRAs to manage health benefits costs effectively. However, financial constraints are pushing mid-to-large-sized companies to explore this option as well. Broker participation in ICHRA promotion has significantly increased, doubling in the last two years, and is projected to reach 37% by 2026. The study also highlights that 83% of employees prefer selecting plans with employer contributions, emphasizing a growing interest in employee choice.

Employer satisfaction with ICHRAs is notably high, with 91% acknowledging its benefits for business operations, including average savings of 15.5%. Traditional employer-sponsored insurance models are increasingly strained by rising medical costs, projected to escalate nearly 8% this year according to the 2026 Milliman Medical Index. Facing significant insurance cost increases, 94% of employers are considering cost-containment measures, with ICHRAs emerging as a favored alternative alongside strategies like self-funding and narrow network designs.

Despite challenges in the Affordable Care Act (ACA) marketplace, which impact ICHRAs as enrollees must choose ACA-compliant plans, broker confidence remains strong. The increase in premiums and deductibles—fueled by the expiration of enhanced premium tax credits as noted by KFF data showing a 58% rise—presents hurdles. Nonetheless, the regulatory environment is expected to continue supporting ICHRA growth, reflecting optimism in the evolving benefits landscape.