The employer's guide · 2026
The ICHRA, explained.
An ICHRA — the Individual Coverage Health Reimbursement Arrangement — lets a company stop buying one group health plan and instead give every employee a fixed, tax-free monthly allowance to buy the individual plan that fits them. You control the budget. They control the choice.
How an ICHRA works.
1
Set one monthly allowance
You pick a fixed, tax-free amount per employee — it can differ by legitimate classes like full-time vs. part-time or by location. That number is your whole benefits budget.
2
Each employee picks their own plan
Employees buy real individual-market plans — the same ones filed with regulators — choosing the network and benefit design that fits their own doctors and prescriptions.
3
Reimbursement runs through payroll
Premiums are reimbursed tax-free up to the allowance, substantiated and documented, on the payroll rails you already run. No insurance risk ever sits on your books.
ICHRA vs. the group plan.
The group plan
- One compromise plan, picked once, for everyone
- A renewal letter every year with a number you can't predict
- One network — employees whose doctors fall outside it lose
- Costs rise with your group's claims history
The ICHRA
- Each person picks the plan that fits their own life and doctors
- A fixed monthly amount that moves only when you decide
- Every network filed in their county is on the table
- Individual-market pricing — your team's claims never reprice you
The rules that matter.
Educational summaries of federal rules — not legal or tax advice.
It's federal, and it's not new
The ICHRA was created by a 2019 federal rule from the Departments of the Treasury, Labor, and HHS, effective January 1, 2020. It works in every state, for employers of any size.
Employee classes
You can vary the allowance across defined classes — full-time, part-time, salaried, hourly, geography, and others — but everyone in a class is treated the same. Some classes carry minimum-size rules when a group plan is offered alongside.
Affordability and the tax credit
An employee offered an affordable ICHRA can't take the marketplace premium tax credit; if the offer is unaffordable for them, they may opt out and keep the credit. Larger employers can generally meet their federal coverage obligations with an affordable ICHRA under IRS proposed rules, which employers may currently rely on.
The 90-day notice
Employees must receive a written notice — generally 90 days before the plan year — explaining the offer and what it means for their tax-credit eligibility.
No double-dipping
An employee can't take both an ICHRA reimbursement and a premium tax credit for the same coverage. The opt-out choice exists precisely so each person can take whichever is worth more.
A special enrollment period
Gaining an ICHRA triggers a special enrollment period, so a company can start mid-year — employees don't have to wait for Open Enrollment to buy their plans.
companies projected to adopt this model
Federal projection
what group single coverage costs today, per year
KFF 2025 survey
real plans we price across seven states
Live artifact
ICHRA, state by state.
The arrangement is federal; the market underneath it is local. These are the states our engine prices today, county by county.
ICHRA questions, answered plainly.
What does ICHRA stand for?
Individual Coverage Health Reimbursement Arrangement. It's a federal arrangement (effective January 1, 2020) that lets a company reimburse employees tax-free for individual health-insurance premiums instead of buying one group plan.
Is an ICHRA legal?
Yes — it was created by a 2019 federal rule from the Departments of the Treasury, Labor, and HHS, and federal analysis projects roughly 800,000 employers will eventually use the model. Being early is not the same as being experimental.
How is an ICHRA different from a QSEHRA?
A QSEHRA is limited to companies with fewer than 50 employees and has federal contribution caps. An ICHRA works for employers of any size, has no dollar cap, and can vary allowances by employee class.
What size company can offer an ICHRA?
Any size — from a two-person company to a national employer. Larger employers subject to federal coverage obligations can generally meet them with an ICHRA that qualifies as affordable under IRS proposed rules, which employers may currently rely on.
Do employees lose their doctors?
Usually the opposite. Instead of one network chosen for the whole company, each employee picks the plan whose network actually has their doctors — from every plan filed in their county.
Is the allowance taxable?
No. Reimbursements for eligible premiums are tax-free to the employee and deductible to the company, like group-plan premiums — without the group plan.
What happens if an employee doesn't want the ICHRA?
Every employee gets an annual opt-out. If the offer is unaffordable for them under the federal test, opting out preserves their marketplace premium tax credit.
What does Insurf actually do?
Insurf is the ICHRA platform: we compute the allowance from your real team and real filed premiums, guide each employee through choosing, generate the program paperwork, and track substantiated reimbursements on your payroll rails. Enrollment applications are submitted by an individually licensed insurance producer — and when a plan denies care, we fight the denial.
See what an ICHRA does to your number.
Drop a census — or sketch your team — and see the comparison on real filed 2026 rates in seconds.
Insurf, Inc. is not a licensed insurance agency, does not sell insurance, and receives no commissions; enrollment applications are submitted by an individually licensed insurance producer. This page is an educational overview — not an offer of coverage, not a recommendation to buy any plan, and not financial, tax, legal, medical, coverage, or insurance advice. Projections are labeled and are not guarantees.