Answers · ICHRA vs group
What is an ICHRA?
An Individual Coverage Health Reimbursement Arrangement lets an employer give employees a fixed, tax-free monthly allowance to buy their own ACA marketplace health plan, instead of buying one group policy for everyone.
It has been available since January 2020. The employer chooses the allowance, which can vary by employee class and by age and family size within a class. Employees buy an individual plan, and the allowance reimburses the premium up to the amount set.
The tax treatment mirrors employer-sponsored insurance: the allowance is not taxable income to the employee and is deductible to the employer. Employees keep ACA-compliant major medical coverage with the same essential health benefits and pre-existing condition protections as a group plan.
The catch is that it is only financially compelling where the individual market prices below the small group market, which is a county-level question. That is what the county pages on this site are for.
Last reviewed 2026-08-21. Premium figures are plan year 2026 on both sides of every comparison, from the CMS Marketplace Public Use Files (individual market) and Ideon (small group). Employer counts from BLS QCEW 2024 Q2. All savings figures are ranges and estimates, not quotes or guarantees.
Related questions
When did ICHRAs become available?
January 2020, under a federal rule that created the Individual Coverage HRA as a distinct arrangement.
How is the allowance taxed?
It mirrors employer-sponsored insurance: not taxable income to the employee, and deductible to the employer.
Is it always cheaper than a group plan?
No. It is only financially compelling where the individual market prices below the small group market, which is a county-level question.