Tired of Group Plan Costs? How ICHRAs Help Small Businesses Offer Affordable, Flexible Health Benefits
If you're struggling to offer health insurance that fits your team and your budget, you're not alone. But there’s a new model changing how small businesses do benefits—and it’s not as complicated as you might think.
After 40 years in the benefits space, I’ve seen plenty of trends come and go. ICHRA isn’t one of them. It’s not a fad. It’s a shift. And for both small business owners and the brokers who support them, that shift means opportunity—more flexibility, more affordability, and more strategic value.
What Is an ICHRA?
An ICHRA (Individual Coverage Health Reimbursement Arrangement) allows employers to reimburse employees—tax-free—for their individual health insurance premiums and other eligible medical expenses. Instead of offering a one-size-fits-all group plan, employers set a monthly budget, and employees choose a health plan that works for them.
How ICHRAs work:
🧾 The employer sets a defined monthly contribution
🩺 The employee picks an individual, ACA-compliant health plan
💸 The employer reimburses approved expenses monthly
It’s a simple idea with powerful results—and with the right administration partner, it's smooth to implement.
Which Clients Are a Good Fit for ICHRAs?
ICHRAs are ideal for businesses (or clients) who fit the following critera:
Employers with multi-state or remote teams
Small businesses approaching ALE status, unsure how to meet ACA requirements
Groups with participation or contribution struggles under traditional plans
Industries with seasonal, part-time, or gig workers—like hospitality, construction, or home health
Startups or nonprofits needing cost control and simplicity
And it’s not just anecdotal. According to the latest HRA Council report (a non-profit, non-partisan advocacy group), the data backs it up:
ALE adoption jumped 34% in the last year.
Small business ICHRA adoption rose 52%.
83% of 2025 HRA users had never offered coverage before.
Why these noteworthy numbers?
Because ICHRAs give employers control over cost and employees control over choice, two things today’s market is hungry for. Instead of subsidizing a plan that doesn’t fit everyone, HRAs set a predictable, tax-efficient budget and give employees the power to choose a plan that actually meets their needs.
Why Small Businesses Are Turning to ICHRAs
Many small employers want to offer competitive benefits—but traditional group plans are expensive, inflexible, and hard to navigate. With ICHRAs, small business clients gain:
Budget control with a fixed, tax-efficient contribution.
Flexibility for teams to choose what fits them best.
Simplicity by outsourcing admin and compliance to an expert.
At HRA Simple, we’ve helped businesses of all sizes use ICHRAs to offer better benefits without breaking the bank. In some states, like Georgia and South Carolina, the first year savings from moving to an ICHRA can save up to 30% of your health benefits budget. That’s worth a 30 minute conversation.
Why Should Brokers Care About ICHRAs?
ICHRAs don’t just change benefits; they change your role. When you introduce an ICHRA strategy, you shift from plan seller to trusted advisor. You’re solving problems as a strategic partner.
With ICHRAs, you can:
Tap into new business from employers who couldn’t offer benefits before.
Avoid renewal-season stress tied to double-digit group plan increases.
Create opportunities to cross-sell ancillary and voluntary lines using money saved from switching to ICHRA.
Deepen trust by offering strategic, not transactional, solutions.
Wouldn’t it be nice to skip the brutal rate-hike talks every year? With HRAs, you get to flip the script—talking about how to use savings to grow benefits, not just cut them. Your clients can recruit and retain talent with a budget that’s actually predictable.
The latest data shows that most small business HRA clients are new to offering benefits at all. HRAs unlock an entirely new market segment for your brokerage to serve. If you’re not offering HRAs, someone else will. And they’ll be the one helping your client stretch their benefits dollars further.
Are ICHRAs for Everyone?
Not always. They’re not a cure-all. But ICHRAs are a powerful, flexible solution, especially in today’s high-cost-of-care environment. Your job isn’t to push every employer toward an ICHRA. It’s to recognize when the fit is right.
When an employer is a good candidate, the impact is often hard to ignore. The first-year savings can be significant, but the real value often shows up in year two and beyond, with pricing predictability and a chance to rethink the entire benefits strategy.
And here’s something important: Small and mid-sized employers frequently reinvest part of their ICHRA savings into expanding benefits… like better 401(k) matches, dental or vision coverage, or even boosting the ICHRA allowance itself. That reinforces the core purpose of offering benefits in the first place: attracting and keeping great employees.
“A few real-world examples:
1. A Georgia company with over 2,000 employees saved $7 million in its first year by transitioning to an ICHRA.
2. My own company, Health One Alliance, with over 220 employees, saved $272,000 in our first year.”
Bottom line: ICHRAs aren’t for everyone. But for the right group, they’re a smart, strategic move.
Brokers who understand ICHRAs - and know when to recommend them - have an edge. You’re advising clients on a strategy that has all the right components of cost containment, recruitment, retention, and employee sentiment, not just insurance. And you’re giving them access to benefits their teams actually value.
ICHRAs help clients offer real choice, maintain budget control, and stay competitive—all without the administrative burden of traditional group plans. We love speaking with brokers about how to serve their clients strategically with HRAs. If you want to chat further, click here to grab some time with our team.
