Report: ICHRA Enrollment Triples in 2026

A health reimbursement arrangement (HRA) is a type of account-based group health plan funded solely by employer contributions that reimburses eligible employees for medical care expenses, up to a maximum dollar amount for a coverage period. HRAs are an attractive option for employers and employees due to their tax-favored status. ICHRAs allow organizations to offer employees a monthly allowance of tax-free reimbursements to buy health care services that fit their unique needs. ICHRA usage is increasing as more plan sponsors consider ways to control costs around health benefits and offer individualized health benefits for their workers.

 

An employer may allow an ICHRA to reimburse all medical care expenses, limit an ICHRA to allow reimbursements only for premiums, limit an ICHRA to allow reimbursements only for nonpremium medical care expenses (e.g., cost sharing), or designate specific medical care expenses that are reimbursable. Although not required, employers most often use ICHRAs to reimburse premiums for individual health insurance coverage or Medicare (including Medicare Parts A, B, C and D, as well as premiums for Medigap policies). ICHRAs also allow businesses to determine eligibility based on employee classes (e.g., full-time, part-time and seasonal workers), which can benefit employers with several employee classifications. However, ICHRAs face restrictions; for example, employers cannot offer any employee a choice between an ICHRA and a traditional group health plan.