Digging into ICHRA

Why I’m Digging into ICHRA

ICHRA is a formal health plan that allows employers to reimburse employees for individual health insurance and qualified medical expenses. I've been spending more time lately looking into it - not because I think it's the silver bullet for healthcare costs, but because it feels like the industry is asking some big questions around portability, defined contribution models, and shifting employer roles in healthcare coverage. ICHRA is one place where those questions converge.

The pace of ICHRA adoption is picking up. According to Becker’s, utilization has grown over 1,000% since 2020 and may now cover between 500,000 and 1 million people. A recent Healthcare Dive article noted a 34% increase in adoption among midsize and large employers in 2025 alone. And while ICHRA might not be mainstream just yet, it’s showing up more often in strategy conversations at the broker level, within HR teams, and in investor decks.

The policy side is evolving too. The House version of the "One Big Beautiful Bill" proposed rebranding ICHRA as the "CHOICE Arrangement" and included provisions for pre-tax premium deductions and small-business tax credits though those didn’t make it into the final Senate version.

I'm intrigued by the potential: cost predictability for employers, flexibility for employees, and a chance to break open employer-based coverage in a more consumer-directed model. But I also think the skepticism is real. Incomplete provider directories, limited pediatric and specialty care access, and shifting more decision-making burden to employees are big concerns. Some argue it’s just repackaged cost shifting.

That’s why I sat down with Ryan Koo, a Benefits Consultant at Marsh McLennan Agency (MMA), where he co-leads the digital health practice. Weaving both the broker and employer lens into our conversation, he’s seen the evolution from the ground floor and has a seasoned perspective on where ICHRA shines and where it still falls short. With over 20 years of experience in healthcare including leading national sales at CVS's innovation arm, Ryan now supports digital health companies in building benefits strategies that attract and retain top talent.

Key Takeaways:

• ICHRA makes the most sense for small employers, high-turnover industries, or those struggling to get competitive group quotes.

• While employee education has improved, there’s still a large learning curve, especially for vulnerable populations - this could exacerbate existing disparities.

• Network adequacy and directory accuracy remain major pain points.

• ICHRAs are a cost management tool, not a healthcare cost reduction strategy.

• Large employer uptake will depend on how they manage risk and culture, not just price.

• The ICHRA space is still maturing; most platforms are figuring out their positioning and differentiation.

TL;DR: ICHRA isn’t a fix for healthcare costs, it’s a financing mechanism. For employers priced out of traditional group coverage, it can offer real value. For employees, it can go either way. As vendors mature and policy evolves, it’s a space worth keeping an eye on. I’ll keep digging - if you’ve seen interesting ICHRA models (or have strong feelings one way or the other), I’d love to hear from you!

1. Cost, Value & Trade-Offs

Q: How do you distinguish between cost savings and cost shifting in the context of ICHRA?

Ryan: It depends on whether you're looking at it from an insurance or healthcare perspective. From an insurance lens, ICHRAs can absolutely create cost savings - you're flipping from defined benefit to defined contribution. But from a healthcare cost perspective, ICHRAs don't necessarily reduce claims costs or address root healthcare expenses.

Q: What types of employers are best suited for ICHRAs?

Ryan: Small employers, high-turnover industries (like restaurants, manufacturing, construction), or low-wage workforces. These groups are often looking to "check the box" on benefits affordably. Because of lower contributions and participation, it’s harder to get competitive group quotes, making ICHRA structurally more viable.

2. Employer Decision-Making Dynamics

Q: Do employers evaluate actuarial value and network quality, or just premiums?

Ryan: Employers typically start with premium costs. Brokers help model contributions based on actuarial values (e.g., 100% of silver vs. 70% of gold). But ultimately, the focus is: what’s the employer giving in contribution, and how does that shape employee options?

3. Employee Experience

Q: Are employees well equipped to navigate the individual market?

Ryan: It's challenging. But tech has evolved since the private exchange era. Many ICHRA platforms now provide wraparound tech support, some offer chat assistance or step-by-step AI-powered shopping experiences. Still, in many cases, the priority is cost containment, not an optimal cultural or benefits experience.

Q: How are employees supported in plan selection and enrollment?

Ryan: Each platform does it differently. Some pair employees with advisors, others rely purely on tech to filter plan options based on zip code, provider preference, utilization, etc. It resembles traditional exchange shopping, but with vendor-specific enhancements.

4. Provider Network & Directory Accuracy

Q: What’s your take on network limitations and directory inaccuracies in ICHRA plans?

Ryan: This is an industry-wide issue, not just an ICHRA problem. But it becomes more acute in ICHRA because employees must make their own decisions based on this data. Ghost networks and inaccurate listings exist everywhere. Some vendors are trying to clean this up using Transparency Act data, but it’s far from perfect.

5. Future Outlook & Misconceptions

Q: What would need to change for ICHRA to scale among large or self-funded employers?

Ryan: It depends on the employer’s priorities. If they have a well-managed self-funded population, there's little reason to move to ICHRA. But if a self-funded employer has high variability or unmanaged risk, they may opt for ICHRA to escape the volatility. Long term, this could segment risk pools - landing healthier groups in self-funded, riskier ones in ICHRA - which could destabilize premiums.

Q: What’s the most common misconception about ICHRA?

Ryan: That it’s a silver bullet for healthcare. It’s a financing mechanism, it doesn’t change the cost of healthcare itself. Until we address root drivers of healthcare costs, ICHRA alone won’t solve the system.

6. Bonus Insight: MEC Plans and ICHRA

Ryan pointed out that many employers use Minimum Essential Coverage (MEC) plans that offer very limited benefits. These employers could consider ICHRA as a way to offer employees true catastrophic coverage with potentially greater value than capped MEC plans.