Understanding Individual Coverage HRAs (ICHRAs): A Comprehensive Guide

A practical handbook for employers, brokers, and benefits professionals on how to leverage the extreme value of Individual Coverage HRAs and your Health Benefits.

Note: This guide was originally published in 2020 and has been updated with 2025 data and insights. 

ICHRA Overview

Super Simple ICHRA Explainer

What does ICHRA stand for?

ICHRA stands for Individual Coverage Health Reimbursement Arrangement. It's also commonly referred to as an ICHRA plan.

What is an ICHRA?

An ICHRA is a type of account-based healthcare plan that allows employers to reimburse employees for individual health insurance premiums and qualified medical expenses tax-free. 

How does an ICHRA work?

The way ICHRA works is super simple. An employer establishes a budget for benefits, employees choose a health plan, and the employer reimburses them on their paycheck. If medical expenses are incurred, they can simply upload a receipt and get reimbursed. 

Who is an ICHRA for?

While ICHRA is available to employees of any size, there are two types of employers that choose to offer an ICHRA. The first is companies that are net new to benefits or recently qualified as an ALE (Applicable Large Employer). The second is companies who are facing renewal hikes, participation concerns, or budget concerns and are looking for an alternative to their group plan.

And now, a little more context.