When it comes to the current state of employer-sponsored benefits, many employers are eager for change.
Looking at recent trends, it’s not hard to understand why. Over the past decade, both employers and employees have faced material increases in healthcare costs. This year, the overall cost of health benefits per employee is anticipated to increase by up to 5.8%, according to a recent survey from Mercer (opens in new tab), creating new bottom-line pressures for employers. For some, it’s become financially challenging to offer benefits at all.
These concerns, and many others, were on full display at the Mercer 2025 Annual Symposium, where I joined 30 national employers to talk about how innovative solutions could help solve the benefits cost conundrum facing employers.
A big topic of conversation was, of course, ICHRA, which has emerged as one of the most exciting new developments in the benefits space. (Read our recent article to understand why Oscar is so bullish on it (opens in new tab)). Some employers are fully bought into ICHRA, while others are still in the early stages of understanding how it works and how it could transform the way they offer benefits to employees. As a result, it’s not surprising to see that there are still a lot of questions and misconceptions about ICHRA's mechanics, from how it's administered to how it’s integrated with existing health plans. Here are a few of the big themes from our discussions.
One of ICHRA’s biggest benefits is that it shifts the financial responsibility from defined benefit to defined contribution, while also eliminating the administrative burden of managing group coverage. For many employers, this predictability and cost control is enough to get them bought in.
ICHRA offers employees flexibility to select an individual ACA plan that fits their personal healthcare needs, rather than being forced into a one-size-fits-all group plan.
But ICHRA’s benefits go far behind cost; it also offers employers a chance to increase quality and access while elevating the overall employee benefits experience. After all, at its most basic level, ICHRA offers employees flexibility to select an individual ACA plan that fits their personal healthcare needs, rather than being forced into a one-size-fits-all group plan. This increases plan utilization, enhances benefits satisfaction, and can reduce turnover by offering a more tailored approach to health benefits.
ICHRA plans offered through the ACA are comprehensive and high quality
Given that the Affordable Care Act (ACA) is about to celebrate its fifteen-year anniversary, it's understandable that many have taken for granted how transformative the legislation was when it was passed. Millions of Americans who had previously been excluded from the healthcare system gained access to high-quality, affordable insurance.
These benefits extend to ICHRA. Since all plans offered via ICHRA must be ACA-compliant, employees are guaranteed access to essential services, including preventive care, medications, and hospitalization. (Notably, all emergency care is covered at in network rates regardless of provider or whether someone is in a given service area.) And because of all this compliance with ACA mandates, employees have access to comprehensive coverage that meets federally mandated standards.
Moveover, in markets where insurers already offer diverse options with competitive networks and cost-sharing structures, employees have the opportunity to choose from a variety of plans that best meet their personal and financial needs. ICHRA also opens up another benefit: Employees can use employer funds to pay not just for their premiums, but also other medical expenses that may not have been covered by their employer plans.
The result of all these benefits: employees are more likely to engage with their healthcare, resulting in higher satisfaction and better health outcomes.
ICHRA shifts risk and financial responsibility away from employers
Many of the questions I fielded during the event focused on what’s usually the most significant issue employers face: the risk and financial burden of managing self-funded plans. Many attendees told us that employers are eager to shift this responsibility elsewhere.
Thanks to ICHRA and the ACA, employers may soon get what they’re looking for. With ICHRA, risk shifts from employers to insurers, individuals, and the government. On the government and insurer side, risk adjustment programs redistribute funds from lower-risk plans to higher-risk plans, protecting insurers against the most extreme financial losses. Likewise, though both their plan selection and out-of-pocket costs, employees bear more responsibility for their healthcare choices.
ICHRA also shifts the financial risk away from employers. Since insurance companies offering ACA-compliant plans assume the full financial risks for covering medical claims, employers are shielded from unexpected high costs. Likewise, with ACA plans insurers are responsible for ensuring that their plans are ACA-compliant, which protects employers from the administrative burden while reducing their regulatory liability.
Embracing ICHRA
For Oscar, one of the biggest takeaways from the Mercer Symposium was that, the more that employers understand ICHRA, the more excited they get about its impact both on their organizations and employees. As we look ahead, it's clear that ICHRA will continue to play a central role in reshaping the landscape of employee benefits by giving employees the flexibility and choice they increasingly expect.
Through ICHRA, Oscar can help employers unlock cost savings and empower employees with flexible health benefits. Learn more today (opens in new tab).
