ICHRA for Employers
Individual Coverage HRAs explained
What is ICHRA?
Predictable budget, employee choice
You set the allowance
Define a monthly reimbursement amount. There's no minimum and no federal maximum, and your costs stay fixed regardless of what employees actually claim.
Employees pick their plan
Each employee shops the individual market for the plan that fits their household, picking their own network, deductible, and benefits.
Tax-free reimbursement
Reimbursements are excluded from the employee's taxable income and aren't subject to payroll taxes, so both sides save.
How it works
How ICHRA flows from budget to reimbursement
Step 1
Set the allowance
Define a monthly reimbursement amount for each employee class, whether that's full-time vs. part-time, salaried vs. hourly, location-based, or another bona fide category.
Step 2
Employees buy coverage
Each employee selects their own plan, whether that's ACA marketplace, off-marketplace, or other qualifying individual coverage.
Step 3
Reimburse tax-free
Employees submit proof of coverage each month. The ICHRA platform verifies eligibility and processes tax-free reimbursements up to the allowance.
What ICHRA unlocks for employers
Authorized under the 2019 Treasury/HHS/DOL final rule and effective in 2020, ICHRA shifts the employer from a fixed-cost insurance buyer to a defined-contribution funder. It eliminates the participation and renewal mechanics that tend to break fully insured small-group plans, neutralizes ALE shared-responsibility exposure when the affordability safe harbor is hit, and works for groups of any size. Reimbursements run through plan documents, monthly substantiation, and a Section 105 framework that keeps the benefit tax-free for the employee and deductible for the employer.
- Defined-contribution funding, fixed monthly cost
- Zero minimum participation, no carrier underwriting
- Scales from 1 employee to 1,000+ across permitted classes
- Satisfies ALE coverage offer when affordability safe harbor is met
- Reimbursements deductible to employer, tax-free to employee
What ICHRA unlocks for employees
ICHRA benefits employees too, not just the company paying for it. Employees get real flexibility they don't have with a traditional group plan: they keep their coverage if they change jobs, they pick the network and benefits that fit their household, and the reimbursement is tax-free.
Most employees pair ICHRA with a high-deductible individual plan, which leaves a four- or five-figure out-of-pocket exposure if a serious claim or hospitalization hits. Voluntary worksite benefits — accident, critical illness, hospital indemnity, and gap — are how you close that gap, paid by the employee at group rates with no direct cost to the company.
- Pick any individual market plan
- Portable, so the plan stays with the employee
- Tax-free reimbursement from the employer
- Possible ACA subsidy coordination for lower-income employees
Side-by-side
ICHRA vs. traditional group plan
| Traditional Group Plan | ICHRA | |
|---|---|---|
| Who chooses the plan | Employer | Each employee |
| Cost predictability | Premiums change at renewal | Fixed employer allowance |
| Minimum employer size | 1–2 employees (varies) | 1 employee |
| Participation requirement | Typically 75% | None |
| Employee flexibility | Limited to selected plan(s) | Any individual market plan |
| Tax treatment | Pre-tax premiums via Section 125 | Tax-free reimbursements |
Setup process
Launching ICHRA in South Carolina
≥ 90 days out
Design & document
Define permitted employee classes and allowance structure, draft the plan document and SPD, and issue the required 90-day employee notice ahead of the plan effective date.
Pre-launch
Platform & education
Select an ICHRA administrator, finalize substantiation workflow, and roll out employee education so the team knows how to shop the marketplace, attest to coverage, and submit for reimbursement.
Ongoing
Enroll & reimburse
Employees enroll through the ICHRA-triggered special enrollment period. The administrator verifies coverage monthly and processes tax-free reimbursements; PCORI fees and any 1095 reporting are coordinated with the employer's tax/payroll workflow.
Alana is the most helpful insurance agent we have ever dealt with. Always positive, upbeat, and efficient — she is honest and upfront about everything. I would highly recommend anyone calling her for a quote.
Robin M.
Long-time client · South Carolina
Related coverage
Other ways we help employers
Group Health Insurance
Traditional fully insured, level-funded, and self-funded plans for employers.
Learn moreVoluntary Benefits
The gap-protection layer that pairs with ICHRA — accident, critical illness, hospital indemnity, and more, paid by the employee at group rates.
Learn moreSmall Business Health
Plan options and tax credits designed for businesses under 25 employees.
Learn more
Testimonials
What Our Clients Say
Real people. Real guidance. Real peace of mind.
I can't say enough nice things about Will Murdock and the hours he's spent helping me find the best plan. He sat on hold listening to elevator music for hours getting all the kinks worked out with my Medicare and Medicaid.
Stacey R.
Medicare client · South Carolina
I was looking for new health insurance and ended up with dental and vision too. Will offered different plans that worked for my budget. Finding insurance isn't always easy, but they made it simple.
Brittany P.
Individual & supplemental plan member · South Carolina
Sherri is incredible. In the 12 years I've handled our company's insurance, we were only ever offered the same two paths. She gave us options no previous agent had ever mentioned, worked directly with each employee, and answered every question.
Jill C.
Group benefits decision-maker · South Carolina
Kearah saved my sanity. She helped me navigate a very uncertain period of getting solid coverage — she was on every call with me and even did footwork on my behalf. I'll be calling her for life insurance next.
ILONA
Health & life client · South Carolina
Brandon is a wealth of information. He's personable, easy to talk to, and made the crazy world of Medicare make sense. He's my recommendation for friends and family getting ready to become eligible.
Matt L.
New Medicare enrollee · South Carolina
Sherri reached out to the Chamber to discuss our health plan and found us a plan with a wider range of benefits. Her knowledge of the health insurance market is remarkable, and her customer service is exceptional.
Irmo Chamber of Commerce
Member organisation · Irmo, SC
Brandon is super compassionate with older folks. He guided my mom through her Medicare open enrollment so smoothly. Thanks, Brandon.
Melissa F.
Family caregiver · South Carolina
As a self-employed small business owner, I'd always carried high deductibles and minimal coverage to make insurance work. Sherri found my family a plan with real coverage and was patient with every question I had.
Victoria A.
Self-employed plan member · South Carolina
The owner and employees were extremely knowledgeable in finding us insurance options. Sherri explained everything and answered every question. Kristian was professional and never made me feel like a burden — he was happy to help.
Allison H.
Long-time client · South Carolina
Andrew is amazing at serving his clients. He cares for them from the beginning to the end of the process. I'd recommend him to anyone looking to add health or life insurance.
Joy H.
Health & life client · South Carolina
Employee benefits carriers
Our Brokerage Partners
Blue Cross Blue Shield
UnitedHealthcare
Aetna
Ambetter
Molina
Why work with us
ICHRA setup done right, at no cost to you
Platform-agnostic guidance
We benchmark the leading ICHRA administrators on plan documents, substantiation, and class-rule support so you pick the right fit, not the one paying the largest override.
Employee shopping support
We help employees evaluate marketplace and off-exchange options, walk them through the premium tax credit trade-off, and select networks that fit their providers.
Transparent broker compensation
Compensation is built into carrier premiums and disclosed in writing under CAA Section 408(b)(2). The rate you see is the rate you pay.
Got Questions?
Frequently Asked Questions
Have a question not listed here? Get in touch.
ICHRA stands for Individual Coverage Health Reimbursement Arrangement. It is a formal employer benefit that allows businesses of any size to reimburse employees tax-free for individual health insurance premiums and, optionally, other qualified medical expenses. Instead of selecting a group plan for the entire company, the employer sets a monthly reimbursement budget and each employee chooses their own health insurance on the individual market.
For employers, ICHRA provides predictable monthly costs, eliminates participation requirements, and scales easily as you grow. You also avoid the administrative complexity of managing a group health plan. For employees, ICHRA offers freedom to choose any individual market plan that fits their needs, portability when they change jobs, and tax-free reimbursement for premiums and eligible expenses.
Any business with one or more W-2 employees can offer ICHRA, regardless of industry or size. Employers can define different employee classes (for example, full-time vs. part-time, or by geographic location) and offer different reimbursement amounts to each class. Employees must be enrolled in individual health insurance coverage to receive reimbursements.
Setting up ICHRA involves choosing an ICHRA administration platform, defining employee classes and reimbursement amounts, drafting plan documents, and distributing notices to employees. Employees then shop for individual plans during open enrollment or a special enrollment period. Murdock Insurance Group guides you through every step, from plan design to employee education, ensuring full compliance with IRS and DOL regulations.
See if ICHRA is right for your business, free
We walk employers through ICHRA setup, compliance, and employee experience step by step.