ICHRA adoption is moving beyond small employers | hioscar Blog | Oscar
ICHRA adoption is moving beyond small employers
New research shows that a flexible health insurance option called ICHRA is becoming a popular choice for all businesses.
Oscar CommentaryOscar Insights
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For a long time, people thought ICHRAs (Individual Coverage Health Reimbursement Arrangements) were only for small businesses that couldn't afford traditional group insurance. However, the HRA Council’s new 2026 Growth Trends for ICHRA & QSEHRA report (opens in new tab) shows that this is no longer the case.
While small businesses still make up a big part of the market, many large companies are now using this model too. New data also shows what employees really do when their employer gives them a set amount of money to pick their own health plan from the open market.
HRA Council estimates that over 20,000 U.S. businesses now use ICHRAs or QSEHRAs to cover more than 500,000 employees and their families. These numbers are likely even higher because the Council’s data doesn't include every single ICHRA platform available.
“What we’re seeing is ICHRA move from an emerging option to a benefits strategy that businesses of all sizes are taking seriously,” said Andrew Reeves, vice president and general manager for ICHRA at Oscar Health (opens in new tab). “For employers, that creates a new opportunity to offer greater choice while gaining more predictability over healthcare costs. And for brokers, it’s a chance to lead the conversation, helping clients understand where ICHRA fits, navigate a changing market, and design benefits that work better for both the business and its employees.”
The biggest change in the 2026 report is how many large employers are now using ICHRAs.
The number of employers in this study grew from 6,600 in 2025 to over 12,700 in 2026. This growth happened across all sizes of businesses, but it was especially fast for companies with 1,000 or more workers, where adoption jumped by 178%.
“The conversation around ICHRA is changing from, ‘Does this work for small businesses?’ to, ‘Where does this fit within a broader benefits strategy?’” said Reeves. “Once employers with hundreds or thousands of employees begin evaluating the model, the questions become much more operational: workforce segmentation, geographic variation, contribution strategy and how much choice employees can realistically navigate.”
For employers, that means ICHRA increasingly deserves consideration alongside rather than outside of traditional group plan strategies. It may not be the right structure for every workforce, but its relevance is no longer confined to companies that have no other way to offer coverage.
Employees aren't just picking the cheapest options
Another notable finding challenges the assumption that employees given a fixed allowance will gravitate toward the lowest-cost coverage available. HRA Council's research finds that the opposite is true. Workers are choosing better coverage.
In the study, 34% of employees picked "Gold" plans and 32% picked "Silver" plans, while only 29% chose the cheaper "Bronze" plans. Also, 56% of people signing up were under the age of 45.
More importantly, many employees were happy to pay a little extra of their own money to get a plan they liked better. The report found that 81% of workers chose a plan that cost more than what their employer gave them. On average, employers gave $459 a month, but the plans workers wanted cost $567. This means employees chose to pay an extra $108 a month to get better coverage. Only 19% picked a plan that was fully covered by the employer's money.
This behavior is a big deal for the future of health benefits.
For decades, most employer health benefits have offered employees a relatively narrow set of plan designs selected by the employer. ICHRA shifts some of that decision-making to the worker, who may be choosing among dozens or even hundreds of individual-market options.
The data shows that people don't just look for the lowest price. “What stands out is that employees appear willing to make trade-offs when they can see them,” Reeves said. “Some people will prioritize a lower premium. Others may pay more for a richer benefit design, a different deductible or a plan that better fits their family. The employer is still financing the benefit, but the employee has much more control over how those dollars translate into coverage.”
For companies, this means the amount of money they give is very important. It determines what kind of plans their workers can realistically afford. It also raises the importance of decision support. More choice can be valuable, but only if employees can compare premiums, networks, cost sharing and other plan features in a way that allows them to make an informed decision.
ICHRA may be adding younger consumers to the individual market
The age of the people using these plans is also significant. In the study, 8% of users were 18-25 years old, 26% were 26-34, and 23% were 35-44. Only 3% were 65 or older. According to the HRA Council, bringing more young, healthy workers into the general insurance market can help keep prices stable for everyone.
While it's hard to say exactly how much this will lower prices, it shows that ICHRAs are helping the overall health insurance market.
Employer-sponsored enrollment historically sits largely outside the individual ACA market. ICHRA creates a bridge between the two: employers fund the benefit, while employees purchase individual coverage. If adoption continues among larger employers, the demographic composition of that enrollment could become increasingly relevant to insurers and state marketplaces.
“This is where ICHRA starts to become more than a benefits-design story,” Reeves said. “If employer-sponsored dollars are bringing working-age consumers into the individual market at a meaningful scale, that has the potential to change the market itself. It creates a relationship between employer adoption, consumer choice and the health of local individual insurance markets.”
For consumers, the practical effect may be greater participation in markets that were historically dominated by people purchasing coverage independently. Over time, broader enrollment can create incentives for carriers to compete more aggressively on product design, networks and pricing – although those effects will depend heavily on local market dynamics.
Small employers remain central to the market
Even with large companies joining in, small businesses are still the biggest part of this market. The report says about 80% of those using ICHRAs have fewer than 50 employees.
For many of these small shops, this isn't just a different way to do insurance; It’s the first time they’ve ever been able to offer any health benefits at all. In fact, HRA Council found that 70% of small businesses starting an ICHRA in 2026 didn't offer insurance before.
Much of the policy discussion around ICHRA focuses on employers moving away from group health insurance. But for small businesses trying to hire good people, this is a great way to offer benefits that were previously too expensive or too complicated.
Brokers will have a bigger role
The expansion of ICHRA also changes the work of benefits brokers and consultants.
You might think that if employees pick their own plans, brokers would have less to do. Actually, the opposite is happening.
Employers must determine contribution levels, employee classes, geographic approaches, affordability and compliance strategy before workers ever select a plan. Employees then need help navigating the coverage options they have available, which is typically a wider variety than in their traditional employer group plan.
This is a new way for brokers to help.
“Brokers have an important role as benefits architects,” Reeves says. “They help companies set up the right structure so that having more choice is a positive change for employees.” For small and mid-sized businesses, this allows brokers to talk about benefits with clients who previously thought insurance was simply too expensive.
For larger consultants, meanwhile, ICHRA could become one more tool in increasingly segmented benefits strategies, particularly for geographically dispersed workforces or employee populations where a single group plan does not perform equally well across markets.
This model is here to stay
While the study doesn't cover every single company in the U.S., the trends are clear. Companies of all sizes are choosing this way of doing things. The next step for the market is figuring out which businesses ICHRA works for best. For employers, this means looking at their specific workforce and the local markets to see if this is the right fit for their organization.
For employees, it means a world where the company provides the budget, but the individual decides how to use it.
And for brokers, it means helping everyone navigate a market where having a choice is a key part of the benefit itself.
"Ultimately, ICHRA isn’t just a trend,” Reeves said. “It’s a fundamental shift toward a more personalized benefits landscape. As we see adoption continue to grow across companies of all sizes, the focus will increasingly be on how we can best support employees as they navigate these new choices, ensuring they get the coverage that truly fits their lives and their families."
