Individual Coverage Health Reimbursement Arrangement — lets employers reimburse employees for individually purchased health insurance.
An ICHRA (Individual Coverage Health Reimbursement Arrangement) is a relatively new health benefit (effective 2020) that lets employers of any size give employees pre-tax money to purchase their own individual or Marketplace health insurance and certain medical expenses, instead of offering a traditional group health plan. ICHRA was created by joint regulations from the IRS, DOL, and HHS in 2019.
Key advantages: no network restrictions (employees pick their own plan), employees keep coverage if they leave the job, predictable employer cost (you set the reimbursement amount), and it counts as ACA-compliant coverage if offered to all full-time employees in a class at affordable rates. Disadvantages: more administrative complexity around proving employees have qualifying coverage each month, and many employees still prefer a curated group plan.
ICHRA classes can be drawn along clear lines: full-time vs part-time, salaried vs hourly, geographic location, and others — but discrimination by health status is prohibited. Common ICHRA administrators include Take Command Health, Gravie, and HealthSherpa. Modern HRIS platforms track ICHRA reimbursements as a non-taxable line item on payslips.
We replaced our group health plan with an ICHRA and now reimburse employees up to $600/month toward their individual Marketplace coverage.
Peoplifi unifies HR, payroll, time tracking, and performance into one modern platform — so concepts like ICHRA stay handled, not stuck in spreadsheets.
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