Which employers will thrive with ICHRA? A guide for brokers | hioscar Blog | Oscar
Which employers will thrive with ICHRA? A guide for brokers
In a complex benefits landscape, ICHRA is a powerful tool to deliver real value and build lasting client relationships.
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The costs of benefits continue to rise, and employers are feeling the heat. According to research by KFF, the average family premiums have increased 24% over the last five years–with a sharp 7% increase in 2024 alone.
Given these rising costs, brokers have the opportunity to offer clients bold innovative solutions to their benefits challenges. Fewer solutions are more bold and innovative than the Individual Coverage Health Reimbursement Arrangement (ICHRA). With ICHRA, employers can use tax-advantaged dollars to reimburse employees for premiums of ACA-compliant individual health plans, as well as qualified medical expenses.
For brokers, ICHRA is powerful because it allows them to offer a benefit solution that meets their client’s needs while also providing budget predictability. Given the increased interest in ICHRA among employers, a thoughtfully produced quote that includes ICHRA could mean the difference between losing a client this year and finding a new opportunity for growth in the years to come.
Here’s how to spot clients that may be a good fit for ICHRA.
When it comes to benefits, more employers today face a tough choice: either take increasingly significant financial hits on annual rate increases or significantly scale back their offerings. This is especially true for small-to-medium businesses. Thanks to a 10-20% increase in premiums, 75 million SMBs are expected to be priced out of employer insurance in 2025.
When it comes to benefits, more employers today face a tough choice: either take increasingly significant financial hits on annual rate increases or significantly scale back their offerings.
ICHRA offers another option: more manageable costs.
ICHRA allows employers to set defined monthly allowances that employees can use to purchase health insurance on the individual market. This means they’re no longer vulnerable to large annual rate increases. The shift away from traditional group plans and level-funded solutions protects employers from the unpredictable risk of their employees’ health and puts them back in the driver’s seat.
Employers with large, diverse workforces
Today’s workforce is more distributed and dynamic. That means that, from a benefits perspective, it’s also often harder to manage.
ICHRA's inherent flexibility provides a significant advantage for employers with non-traditional employee groups. The state-by-state nature of the individual marketplace insurance means that an ICHRA is a good fit for employers looking for flexibility in what they offer to employees in different states. ICHRA sidesteps the logistical nightmare of offering a single group plan across various geographic locations. Employers can offer one streamlined solution that simultaneously provides a highly local and customized solution for all their employees.
The same goes for employers that have large variable or part-time workforces. There are now about 21 million independent and gig workers in the U.S. alone. These workers tend to be underserved by employer-sponsored health insurance. For these and other workers who might not be eligible for traditional group coverage, ICHRA is a powerful alternative.
Employers who struggle to engage employees in group plans
Many employers are turning to ICHRA plans in part because they struggle to maintain minimum employee participation rates mandated by group plans. These mandates don’t exist on individual plans.
Because employees are shifted to the individual market with an ICHRA, employers are no longer subject to participation rates like they are in the traditional group market. Employers can satisfy the employer mandate with a benefits solution while not having to worry about whether or not their employees choose to participate.
What’s more, because ICHRA eliminates the "one-size-fits-all" solution, employees have an opportunity to find plans that actually fit their individual needs, which provides an opportunity to increase participation.
ICHRA: A solution for forward-thinking cost-conscious employers
In today's challenging benefits landscape, where costs are escalating and employee needs are evolving, ICHRA emerges as a powerful tool for brokers seeking to provide genuine value and secure lasting client relationships.
ICHRA empowers employers to regain control over their healthcare spending, achieve budget predictability, and cater effectively to the unique circumstances of their workforce. This is achieved by offering a viable alternative to traditional group plans, whether facing steep renewals, navigating level-funded complexities, struggling with participation, or managing remote teams.
Ultimately, recommending ICHRA is not just about presenting another option. It's about equipping clients with a modern, flexible, and cost-conscious solution that addresses their evolving needs and positions both the client and the broker for sustained success in the years ahead.
