The ICHRA market is not only for a moment, but it is also mature.
While new startups and investors are only awake now, thousands have already provided flexible, portable health benefits to employees through a health reimbursement arrangement with personal coverage. Visionary employers are moving away from strict group plans and embracing a better model with today’s workforce, and decision makers are also noticing.
State legislatures in Georgia, Ohio and Texas are weighing new bills that will provide tax credits for businesses that contribute to their employees. This is an exciting time for American healthcare.
For those unfamiliar, ICHRA is an emerging model where employers set monthly allowances for employees to purchase insurance in the individual market. The arrangement was built on President Obama's 21st Century Treatment Act, but President Trump expanded through executive orders that allow employers to control their health care costs, rather than insurance companies. For employees, ICHRA means they can choose the plan that best suits their health needs and budget, rather than a cookie-cutter group plan.
The Affordable Care Act lasted for a decade, with more than 24 million Americans buying their health care in the personal market. As employers reconsider traditional group plans at unpredictable renewal rates, ICHRA is an option to enter the individual market as employer-sponsored insurance and employees seek personalized health care.
Let's take a closer look at why investors and politicians are following Ichra.
A wave of bills to improve profits
Health care costs soar throughout the United States. A new Gallup poll found that one in 10 American adults (equivalent to nearly 29 million) have been unable to afford or access quality healthcare recently. The crisis will only be exacerbated by tariffs on medical equipment and supplies.
Lawmakers in several states are trying to expand health care opportunities for employees of large and small businesses, many of whom do not currently provide insurance, by imposing substantial tax breaks on businesses that offer health reimbursement arrangements to their employees.
In Georgia, House Bill 341 imposes a tax credit on businesses with 100 employees or fewer employees, contributing to employees. Currently, Ohio's Ways and Means Commission is weighing Bill 133, which would authorize businesses with 50 or fewer employees to impose similar tax credits. The third pro-Qilla legislation of SB in 1949 is passing work in the Texas Senate. In each case, supporters aim to expand access to health care through ICHRA.
The recommendations follow the leadership of Indiana’s Health Care Affairs Act, which was signed into law in 2023, which provides tax breaks for businesses with less than fifty employees who provide health benefits through the ICHRA. Employers can claim $400 per employee in the first year and $200 per covered employee in the second year.
“By incentivizing employers to adopt Ichras, we can help reduce health care costs, increase employee satisfaction and ultimately incentivize more healthcare options in the economy,” said Ohio Representative Meredith Craig.
Small Business Considerations
Small businesses are not waiting for legislation, they are already ahead. Thousands of people abandoned a modern, flexible model to allow employees to sit in the driver's seat. ICHRA is not only a solution – it is a strategic advantage.
It is worth noting that the transition from group planning to ICHRA is a major shift – requiring careful planning and proactive communication with employees. ICHRA’s responsibility to purchase insurance plans for individuals rather than HR teams makes it necessary for companies to choose the right partners and technology platforms to ensure that the transition is seamless. And the partner should be able to provide support at each stage, not just open admission.
The proposed legislation, along with a new wave of VC investment, has attracted a new pack of startups to Ichra Space. As employers prepare to open enrollment in 2025, HR and financial leaders should go beyond buzz or valuation to provide employees with a full range of program choices and strong support.
Even though the practice of paying out health insurance to employees is well established, ICHRA is relatively new. These benefits plans will only improve as more people join individual markets, expanding the risk pool and reducing program costs.
Continuous exercise
The Ichra space is heating up. This is good news for businesses that understand the importance of retaining good benefits and for employees who want to choose the healthcare plan that best suits their family needs and bring it to the next employer.
This moment is not luck – it is built. Years of progress have laid the foundation for Ichra and have finally been recognized. As the market heats up, one thing is clear: Employees and employers deserve more hype – they deserve better health care, smarter benefits, and partners who know what they are doing.
Photo: Cat View, Getty Images
Jack Hooper is the CEO and co-founder of Take Comment, a Dallas-based SaaS company, which provides health compensation arrangement management. Jack is a founding member of the HRA Council and served as chairman of the board. He is a Wharton graduate and graduated from The New York Times, Welfare, Dallas Morning News, Bloomberg and more. His motto? “Health insurance has never been so complicated.”
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