ICHRA in Pennsylvania 2026: 2027 Rates Already Up 17%

Does ICHRA beat small group in Pennsylvania?

In nine counties, yes, on the numbers behind this site's 2026 dataset. The Philadelphia corridor — Philadelphia, Bucks, Delaware and Montgomery counties — shows an individual-market benchmark premium of $243.73 a month against a small-group benchmark of $328.72 a month, a spread of $84.99 a month, or an estimated 25.9% over the year. Run that out to $1,019.88 a year per employee, and that is before anyone in your company has opened a 2027 renewal letter.

Here is the part that is easy to miss if you only read the statewide headline: most of Pennsylvania does not currently qualify. Of the state's 67 counties, only nine show a small-group benchmark priced above the individual-market benchmark, and all nine sit in three clusters in the eastern part of the state — the Philadelphia metro, the Lehigh Valley, and the Poconos. Pittsburgh's Allegheny County and the rest of the state currently price the other way, which is exactly the kind of detail a statewide average hides and a county-by-county map does not.

Who this is actually for

Three different Pennsylvania employers read an article like this, and it is worth being honest about all three up front, because the arithmetic is not the same for any of them.

The first already renewed small-group coverage for 2026 and is still absorbing that number. They want to know whether the next renewal, the one built around the rates already filed for 2027, is worth waiting for or worth getting ahead of.

The second offers nothing at all, usually because a full small-group plan felt out of reach for a 6- to 20-person company, and the owner has been quietly worried about losing candidates to a competitor down the street that offers even a modest benefit. That employer is not choosing between ICHRA and small group. They are choosing between ICHRA and nothing, and the arithmetic below works out very differently for that decision than it does for the first employer.

The third employer is in Pittsburgh, Erie, Scranton, or one of the other 58 Pennsylvania counties this article's headline number does not currently apply to. That employer deserves a straight answer too: on this year's rate data, the pure cost-savings case made here is specific to nine counties in the eastern part of the state, and pretending otherwise would undercut the one thing this site is supposed to be reliable about.

Why Pennsylvania premiums keep rising

A few terms are worth defining once, since the rest of this article leans on them. A rate filing is the formal proposal an insurer submits to a state regulator — in Pennsylvania, the Pennsylvania Insurance Department (PID) — requesting permission to charge a new premium for the coming plan year. A rating area is a geographic zone, usually a group of counties, that a state uses to set a single premium scale; it is why several neighboring Pennsylvania counties in this article show identical benchmark premiums. The individual-market benchmark premium is the second-lowest-cost silver plan available to a representative enrollee in a given rating area — the same figure the federal government uses to calculate premium tax credits. The small-group benchmark premium is the comparable figure built from small-group plan filings for that same rating area.

According to the Pennsylvania Insurance Department, the drivers behind the increases described in this article are rising medical and prescription-drug costs, new federal rules affecting marketplace enrollment, and the expiration of enhanced federal premium tax credits at the end of 2025. The department's October 2025 announcement quoted Insurance Commissioner Michael Humphreys describing the effect plainly: "Congress's inaction is driving uncertainty and leading to higher costs for Pennsylvanians." The same announcement gave a household-level example of the enhanced-credit expiration alone pushing one couple's annual premium from $7,032 to $35,712 before accounting for the underlying rate increase.

The Peterson-KFF Health System Tracker's July 8, 2026 analysis of 2027 filings breaks the national pattern into two separate effects. The underlying medical trend — the rising cost of hospital care, physician visits and prescription drugs — had a median of 10% across the insurers it reviewed, which the brief calls the primary driver. On top of that, insurers separately estimated that the loss of enhanced premium tax credits would add roughly 4 percentage points to 2027 premiums, because healthier enrollees are expected to leave the marketplace as their subsidies shrink or disappear, leaving insurers with a smaller, sicker remaining risk pool to price around. One insurer's filing, quoted in the brief, put it directly: enhanced subsidies "expired...while we observe an increase in 2026 open enrollment...we anticipate a reduction in the overall market size...lead[ing] to increased average statewide morbidity in 2027."

What actually happened to your 2026 renewal

If your company renewed small-group coverage for 2026, here is the statewide context for the number you got. The Pennsylvania Insurance Department approved an average 21.5% weighted increase for the individual market and an average 12.7% increase for the small-group market, according to its October 14, 2025 announcement. That small-group figure was itself reduced from an initial average request of 13.1% after the department's review process blocked $50.1 million in what it described as unjustified premium increases. The largest single small-group increase approved was Highmark Care Benefits, at 21.85%.

Nationally, the Center on Health Insurance Reforms (CHIR) at Georgetown University found that the median proposed 2026 marketplace premium increase was 18%, which it described as the highest in nearly a decade — nearly triple the median proposed increases of 6% in 2024 and 7% in 2025. Pennsylvania's approved individual-market figure of 21.5% sits above that national median.

What's already filed for 2027

This is the part of the story most 2026 renewal conversations do not yet include. On July 23, 2026, the Pennsylvania Insurance Department announced that individual-market insurers had filed 2027 rate requests averaging a weighted 17.1% increase, and small-group insurers had filed requests averaging 11.5%. Filings were submitted May 15, 2026; public comment is open through August 22, 2026, and final approved rates are expected in the fall of 2026 for January 2027 coverage.

The individual-market filings vary widely by carrier. Ambetter Health filed for the largest increase, 40.90%, followed by Keystone Health Plan Central at 33.83% and Highmark Benefits Group at 21.40%. On the lower end, Geisinger Health Plan filed for 10.46% and UPMC Health Network for 12.03%.

Source: Pennsylvania Insurance Department, "Shapiro Administration Receives Proposed 2027 Health Insurance Rates" (Jul. 23, 2026). Filed requests, not final approved rates; Pennsylvania, individual market, plan year 2027.

Requested is not the same as approved. In 2026, the department cut the small-group request from 13.1% to 12.7% and denied $50.1 million in increases outright, so the 17.1% and 11.5% filed for 2027 could still move by the time final rates publish this fall. But the direction of travel, two years running, has been the same: a double-digit request followed by a double-digit approval, even after the state's review process trims it back.

Is this just Pennsylvania, or everywhere?

It is national, and the timing is not a coincidence. CHIR's June 18, 2026 analysis of the earliest state filers for 2027 found a range from 6.5% in Vermont to 22.4% in Washington State, based on preliminary numbers, since most states' 2027 rates were not due to federal regulators until mid-July and were not fully public until the end of July. By the time the Peterson-KFF Health System Tracker published its broader analysis on July 8, 2026, covering 77 insurers across 16 states and Washington, D.C., the national median proposed 2027 increase stood at 14% — lower than 2026's 18% median, but still a second consecutive year of double-digit proposed increases, which CHIR's researchers flagged as unusual against the 6% and 7% medians of the two years before that.

Sources: Pennsylvania Insurance Department (Oct. 14, 2025; Jul. 23, 2026); Georgetown University Center on Health Insurance Reforms (Jun. 18, 2026); Peterson-KFF Health System Tracker (Jul. 8, 2026). Figures are weighted or median averages as noted by each source.

If your Pennsylvania renewal already stung in 2026, the honest reading of these two filings is that the next one is not likely to feel materially different in kind, even though the requested percentage is a bit lower than last year's. The question worth asking before that renewal letter arrives is whether a fixed ICHRA contribution, priced against your employees' actual counties, would cost less for the same plan year. The next three sections work through where that is true in Pennsylvania today, and where it currently is not.

Philadelphia's four-county corridor: the math

Table 3 below is generated directly from this site's county dataset, not typed by hand. It covers Philadelphia County and its three immediate collar counties — Bucks, Delaware and Montgomery — which currently price identically because they sit inside the same CMS-defined rating area for individual and small-group filings.

Source: src/data/qualified_counties.json, 2026 plan year (Ideon rate data, cross-verified against CMS public-use marketplace files). Estimates, not quotes; actual results depend on your workforce.

Philadelphia County alone holds 1,593,208 people in this dataset, and the four-county corridor together holds 3,670,082. That combination — a large, dense metro where the individual-market benchmark still sits meaningfully below the small-group benchmark — is a genuinely useful one, since most of the country's highest-percentage qualifying counties are thin, rural counties with small population bases. Philadelphia's 25.9% spread is lower than some of those rural counties elsewhere in the dataset, but it applies to nearly 3.7 million people rather than a few thousand.

Lehigh Valley and the Poconos: two more rating areas

Outside the Philadelphia corridor, two more clusters currently qualify, each priced under a different rating area than Philadelphia and than each other.

Source: src/data/qualified_counties.json, 2026 plan year (Ideon rate data, cross-verified against CMS public-use marketplace files). Estimates, not quotes.

Notice that the Poconos, the smallest cluster by population at 233,146 people, shows the largest percentage spread at 30.6%, while the much larger Philadelphia corridor shows the smallest spread at 25.9%. That is a common and easy-to-misread pattern in this dataset: percentage spread and population size do not move together, and a company with a multi-county Pennsylvania workforce needs to check each county its employees actually live in rather than applying one county's number to the whole team.

How an ICHRA actually works, mechanically

An Individual Coverage HRA, or ICHRA, is a federal HRA structure created by a 2020 final rule from the IRS, the Department of Labor and HHS. It lets an employer of any size, including a single employee, set a fixed monthly reimbursement amount instead of buying a group insurance policy. Employees use that allowance to buy their own individual-market plan — on the ACA marketplace or off it — and submit proof of coverage, called substantiation, to get reimbursed tax-free.

An employee class is a permitted way of grouping employees (full-time versus part-time, salaried versus hourly, or by geographic rating area, among others) so an employer can offer different ICHRA terms to different classes. The affordability test is the calculation that decides whether a given ICHRA contribution counts as "affordable" under IRS rules for a specific employee, which in turn decides whether that employee keeps eligibility for a premium tax credit. None of these mechanics are Pennsylvania-specific; they apply the same way in every state.

The savings shown in this article are a rate-spread effect, not a discount or a subsidy the employer is somehow accessing. In the Philadelphia corridor, the benchmark individual-market plan currently costs less per month than the benchmark small-group plan. An employer who sets an ICHRA contribution near the individual benchmark is funding real coverage at a lower monthly cost than the small-group alternative, for that specific county, for that specific plan year. If the spread narrows or reverses when carriers refile for 2027, so does the savings case, which is exactly why the filed-rate figures earlier in this article matter alongside the county data: a Philadelphia-area small-group renewal facing an 11.5% filed increase for 2027 changes this comparison, even if the individual-market side of the equation does not move by the same amount.

Employee classes are where a multi-county Pennsylvania workforce shows up in plan design. A professional-services firm with staff split between Philadelphia and the Lehigh Valley might use a rating-area class, since the federal rule permits classes defined by geography, given that those two areas price under different benchmarks. What an employer cannot do is offer the same employee class a choice between the ICHRA and a traditional group plan; the class has to get one or the other, cleanly, which is one of the more common places a first-time rollout goes wrong.

Two worked examples

The arithmetic below uses the Philadelphia corridor and Bucks County benchmark figures from Table 3. Both examples are illustrative, not a projection for any specific business, and are built purely to show how the math works.

Neither example is a promise about what your renewal, your workforce, or your actual carrier quote will show. They combine this site's benchmark figures with a separately sourced, not-yet-final rate-filing percentage to demonstrate the mechanics, not to forecast your bill.

How ICHRA adoption is actually growing

ICHRA is not a niche product anymore. The HRA Council's "Growth Trends for ICHRA & QSEHRA 2024-2025" report, based on anonymized data voluntarily shared by fifteen member organizations through January 2025, found that small, non-ALE ICHRA adoption grew 52% year over year among founding members, while aggregate large-employer (ALE) adoption grew 34%, with some large-employer cohorts up 49%. The same report found that 83% of employers who started an ICHRA or QSEHRA in 2025 had never previously offered any coverage — we found that figure in only that one report, so we are stating it plainly rather than implying it is independently confirmed elsewhere.

That growth curve matters in Pennsylvania because of who is not currently covered. Nationally, 59% of firms with 10 to 199 workers offer health benefits at all, compared with 97% of firms with 200 or more workers, according to KFF's 2025 Employer Health Benefits Survey, published October 22, 2025. Flip that small-firm figure around: an estimated 41% of companies in that size band offer nothing, nationally, in 2025. The real competitor to ICHRA in most of Pennsylvania's small-business economy is not small group. It is nothing.

Setting up an ICHRA in Pennsylvania

The rules are federal, so a Pennsylvania rollout follows the same sequence as anywhere else in the country. The order matters more than most employers expect.

1. Pull your census by county. Not by headquarters address — by where each employee actually lives, since Philadelphia, the Lehigh Valley and the Poconos each carry their own benchmark, and most of the rest of the state currently prices the other way.
2. Check the spread for every county your team lives in. The tables above cover the nine qualifying counties; the savings map covers the rest of Pennsylvania.
3. Model affordability before setting a contribution amount. The reimbursement level decides whether each employee keeps premium tax credit eligibility.
4. Define employee classes carefully, if you use them. Class rules have minimum-size requirements and hard constraints under the federal rule.
5. Send the required advance employee notice on time. Late notice creates real compliance problems, not just an awkward conversation.
6. Budget for onboarding support. Employees who have never shopped the individual market need guidance once, not ongoing hand-holding.

The honest limits of this data

How these numbers are calculated

Every county figure in this article comes from the same dataset that powers our savings map, not a survey or a sales estimate. For each county, we compare a 2026 individual-market benchmark premium — the second-lowest-cost silver plan available to a representative enrollee, the same benchmark the federal government uses to calculate premium tax credits — against a small-group benchmark premium built from comparable small-group plan filings for that rating area. Both figures come from Ideon, a licensed insurance rate-data provider, and are cross-verified against CMS public-use marketplace files before publication. A county "qualifies" when the individual benchmark sits below the small-group benchmark; the percentage and dollar figures in this article are the gap between those two numbers, expressed as an annual per-employee figure at 12 times the monthly difference.

The Pennsylvania and national rate-filing figures (21.5%, 12.7%, 17.1%, 11.5%, 18%, 14%, and the 6.5%–22.4% state range) come from separately published, externally sourced analyses — the Pennsylvania Insurance Department, the Georgetown University Center on Health Insurance Reforms, and the Peterson-KFF Health System Tracker — not from our own county dataset, and they describe filed or approved carrier rate changes, not the benchmark premiums used in the county comparison above. We have kept those sources clearly separate throughout this article rather than blending them into one number.

Three limitations are worth stating plainly. First, benchmark premiums are built around a representative enrollee profile, so an unusually young or unusually old workforce will see a different real-world spread than the county figure implies. Second, these are benchmark plans, not every plan on the market; an employee who chooses a richer or leaner plan than the benchmark will see a different premium, though the relative spread tends to hold directionally. Third, rates are filed and refreshed annually, and Pennsylvania's 2027 filings are not yet final, so a county that qualifies for 2026 is not guaranteed to qualify, or to qualify by the same margin, for 2027.

Questions Pennsylvania employers actually ask