ICHRA vs group health: which one actually fits a small team?

Small employers in South Carolina usually land in one of two designs: a traditional group health plan, or an Individual Coverage HRA (ICHRA) that reimburses employees tax-free for their own individual policies.

Neither is a trick. They solve different problems. The wrong one feels like you are overpaying for a plan half the team cannot use.

When a group plan still wins

Group coverage is simpler to explain and often cheaper per person once you have a bigger, younger census. One carrier, one renewal, one HR conversation. If your team is in similar ZIP codes and you want a single network, start here.

The tradeoff: you are picking one plan for everyone. A high-deductible HSA design that works for a 28-year-old may be a non-starter for someone managing a chronic condition.

When ICHRA is the better tool

ICHRA shines when your people are spread out, ages are mixed, or you want a predictable monthly budget instead of a renewal surprise. You set an allowance by class (full-time, part-time, salaried — with IRS rules), employees shop individual plans, and you reimburse up to that cap.

Employees who qualify for marketplace subsidies can often land a richer plan than the group option you could afford. You stay in control of the spend.

What we model before you pick

We run the same census both ways: group quotes from the carriers we appoint, and an ICHRA allowance against individual plans in each employee’s ZIP. You see monthly cost, employee paycheck impact, and who wins or loses in the switch. Then you decide — we do not push a product line.

If you want that model, bring a roster with ages, ZIP codes, and who has covered dependents. That is the whole homework assignment.