Some employers are putting health insurance in workers’ hands. Here’s how it’s going.

In an era when eye-popping healthcare premiums are prompting employers to take a hard look at their benefits, some are considering an option that wasn’t even available 10 years ago. Rather than paying for a group health plan, they’re giving their employees money to buy their own through an individual coverage Health Reimbursement Arrangement (ICHRA).

ICHRAs, first made available in 2020, are still a fairly nascent strategy for employers looking to cut health costs.

Nationwide, about 200,000 employees and their dependents were given the option to enroll in an ICHRA in 2025, per the most recent data from trade and advocacy organization the HRA Council. The council’s executive director, Robin Paoli, told us that “growth continues to be strong” but official numbers likely won’t be out until June. The council is also working on compiling data on employees’ satisfaction with ICHRAs.

HR leaders at organizations that have switched from group health plans to ICHRAs in recent years told us their decisions were driven largely by cost in addition to concerns about employee choice. Transitioning to an ICHRA requires a fair amount of change management, they said, as it puts the onus on workers to manage their own health plans.

Making the ICHRA switch

Sales training company Janek Performance Group hadn’t considered offering ICHRAs until its HR team received word that its insurance carrier would not be renewing the firm’s group health plan this past January, according to Kim Norton, director of people and compliance.

When Janek consulted its broker about the issue, the company was presented with a group health plan that was expected to raise health expenses by 40%, Norton said, with a high deductible and out-of-pocket costs.

Norton said she and her team found this plan unacceptable for Janek’s staff. “As a small company, there’s no way that we would be able to shield our employees from that premium hike,” she said. “We’d have to pass some of that on to them.”

Instead, Janek elected to offer employees an ICHRA starting in March and cover 80% of the plan’s costs. Under this plan health costs have risen by a more palatable 15%, Norton said.

BrightView Health, which runs outpatient substance use disorder treatment centers in five states, decided to transition from a self-funded health plan to an ICHRA in 2025. The organization’s leadership team made the decision after they were “faced with some pretty significant premium increases” that were expected to drive health costs up 20% to 25%, according to Rachel Fitzgerald, an HR business partner with the company.

“The budget really was the driving factor, and how can we help absorb that cost, not just for us as an organization, but our employees as well?” she said.

Selling the chief financial officer on the ICHRA was easy, Fitzgerald said, given his concerns about various factors that can drive up costs on a self-funded plan—think prescription claims, stop-loss carriers, etc.

But Fitzgerald was most interested in the potential for an ICHRA to increase employees’ access to certain providers. “I knew so many employees that were not having success finding in-network providers” on the self-funded plan, she said. Switching to a model that gave employees the “power of choice” regarding their carriers might help close this access gap, she believed.

Managing through change

Both Norton and Fitzgerald identified certain positive impacts from the ICHRA switch. Some employees were able to join health plans they didn’t previously have access to, while others no longer had to travel as far to see an in-network provider. Costs to the workers vary, though Norton said at least one of her employees is actually paying less—just $7 a month under the ICHRA plan, compared to more than $100 previously.

But companies may face an uphill battle acclimating employees to ICHRAs before they realize the value of these plans.

When Norton’s team first told its employees they’d be switching from a group plan to an ICHRA, “it was quite shocking,” she said, adding that the average Janek employee has been with the company for five years and had grown accustomed to the group plan. Some of them, she said, had never heard of the Affordable Care Act (ACA) marketplace. Others had health issues and wanted to know what an ICHRA would mean for their care.

“There was definitely a lot of emotion for several of our pretty key employees,” Norton said, though many employees have become more comfortable as they’ve become more educated about their options, she added.

The company partners with an ICHRA administrator, Zorro. It is one of several tools on the market that can educate employees, help them select their plan, and facilitate payments. In meetings with Zorro, employees can see which carriers and plans are available in the region where they’re based. The transition has been fairly simple from an administrative perspective, Norton said, as costs are deducted directly from employees’ payroll, just as they’d be for a traditional group plan.

Recently, “I would say the tide is turning, with feedback being a lot more positive,” Norton said. New hires, she added, “were very excited to have a local option” when they onboarded.

“Organizational readiness” is a major factor employers must consider when mulling the switch to an ICHRA, Maya Perl, co-founder and chief customer officer of Zorro, told us. “It’s a big shift for organizations…it takes a lot of education, it takes a lot of change management.”

Transitioning to an ICHRA may require more work than anticipated, Matt McGough, a policy analyst at national health policy and research nonprofit KFF, told us. Employees sometimes still feel more comfortable reaching out to their HR department for help, even if third-party support is an option, he explained.

BrightView’s ICHRA has “definitely increased the work that we have to put into the health benefits itself,” Fitzgerald said. She noted that her remit once included both payroll and benefits, and she didn’t believe she could handle both of those areas now, given the time and energy required to address employees’ questions about their ICHRA plans. Having a coordinator that can field day-to-day questions about employees’ plans has helped, she added.

Unanswered questions

Factors like geography and fluctuations in the market can weigh on an ICHRA’s success, sources told us. In some areas, individual health insurance plans can be more expensive, lower in quality or variety, or aren’t taken by many providers, McGough said.

“There are areas of the country where an ICHRA is definitely more ripe to grow,” McGough said.

Jack Hooper, who leads Take Command Health, an ICHRA administrator that counts BrightView as a customer, echoed this. “There are some regions where it’s like, ‘Oh, man, the group plan’s got to be really bad for an ICHRA to make sense,’” he said. Take Command leans on impact and opportunity analyses to determine whether employees’ choices will look favorable under an ICHRA, he added.

Transitioning to an ICHRA doesn’t totally get employers off the health insurance rollercoaster ride, either.

The individual health insurance market is facing drops in enrollment and spikes in premiums following the Jan. 1 expiration of enhanced premium tax credits. Many insurers chose to exit unprofitable geographic markets or reduce ACA marketplace benefits in 2026, lowering enrollees’ options.

More plans are expected to exit in 2027, too. Cigna, for instance, announced in April it would no longer offer marketplace insurance beginning next year, impacting 369,000 people.

“ICHRA is sort of being pitched as ‘this guarantees predictability,’” Katherine Hempstead, senior policy officer at health philanthropic organization the Robert Wood Johnson Foundation, said. “I don’t really think that’s true.”