ICHRA Basics for Employees and Employers
How individual coverage HRAs let employers fund Marketplace plans.
What an ICHRA is
An Individual Coverage Health Reimbursement Arrangement lets an employer reimburse employees tax-free for individual health coverage and qualified expenses, instead of or alongside a traditional group plan.
Employees typically buy a Marketplace or other individual plan, then get reimbursed up to the employer's allowance.
Why it matters
ICHRAs can give small and mid-size employers a way to contribute to coverage without building a full group plan. Employees keep the consumer protections of individual ACA coverage when they buy Marketplace plans.
If your employer offers an ICHRA, compare the allowance plus Marketplace premiums and subsidies — affordability tests can affect subsidy eligibility.
Frequently asked questions
- Does an ICHRA count as an offer of coverage?
- It can affect Marketplace subsidy eligibility depending on whether the ICHRA is considered affordable. Check HealthCare.gov guidance for your situation.
- Can I pick any Marketplace plan with an ICHRA?
- Usually you choose an individual plan that meets the ICHRA's rules; employers set allowance amounts by class of employee.
Sources
- HealthCare.gov — the official ACA Health Insurance Marketplace · reviewed 2026-01-15
- KFF (Kaiser Family Foundation) — health policy research · reviewed 2026-01-15
- OLYRON HealthMatch editorial methodology — how we source and rate options · reviewed 2026-01-15
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