Since the Individual Coverage Health Reimbursement Arrangement, or ICHRA, first became available in 2020, its popularity and adoption have grown rapidly. According to a new report shared by Remodel Health, in partnership with PeopleKeep, ICHRA adoption grew by 29% from 2023 to 2024 alone.
Beneficial to a variety of organizations, including small business owners and large employers, an ICRHA provides flexibility and helps employers provide tailored benefits to meet their workforce’s needs. As noted in the report, ICHRA has a consistent spread across industries and proves to be highly adaptable for many different business types – both small and large.
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The report found that there is a near-even split in ICHRA adoption across small employers and Applicable Large Employers (ALEs). ALEs, which are governed by the large employer mandate, must provide health benefits to employees, whereas smaller groups, with less than fifty employees do not have to observe the same requirements.
“This makes it likely that every broker’s book of business contains groups where ICHRA could meet specific needs effectively,” the report said.
Notably, industries such as automotive, non-profit and food and beverage have experienced widespread adoption of ICHRA, especially among larger employers whose goals align naturally with ICHRA’s flexibility and structure, the report found.
In addition to gaining traction across industries, ICHRA has been adopted by organizations in nearly every U.S. state. The report found that ICHRA adoption within organizations of 100 employees or more was highest in Arkansas, Maryland, New Hampshire, Oregon and Wisconsin – with an adoption rate of over 70%.
Among small organizations, comprising 2-20 employees, the report found that 12 states had ICHRA adoption rates of 100% including Alabama, Alaska, Idaho, Iowa, Kansas, Louisiana, Maine, Missouri, New Mexico, Rhode Island, West Virginia and Wyoming.
The study found that industries with the fastest-growing ICHRA adoption rate include business services and nonprofits, followed closely by technology, healthcare and manufacturing. However, notably over one-third of the remaining ICHRA participation spans a variety of other industries – emphasizing the broader trend of cross-industry adoption.
When it comes to contribution size, the study found that industries often associated with higher wage earners, such as engineering, dentistry and real estate, show higher ICHRA contributions on average than sectors such as food and beverage or logistics.
Contributions were also higher among non-ALE organizations, with 50 full-time employees or fewer, coming in with an average contribution size of $600 compared to $448 for ALE organizations.
The report shared that industries such as engineering, dentistry, real estate, technology and agriculture saw average contributions of $750 or higher – spanning up to $1,126. Whereas industries such as logistics, food and beverage, automotive, construction and assisted living saw contributions less than $400 on average.
“For large employers, this data is equally intriguing – it shows they can provide robots, personalized benefits at a more efficient cost. By moving away from traditional group models, larger employers can stretch their contribution dollars further, enhancing their benefits offerings without significantly increasing expense,” the study said.
Geographically, states with a higher cost of living saw higher contribution amounts – reaching as much as $1,115 in the District of Columbia and over $800 New York, Virginia, Connecticut, New Jersey and Massachusetts.
States with a lower cost of living such as Maryland, Oregon, Kentucky, Pennsylvania and Indiana saw contribution rates less than $500 on average.
With the growing adoption of ICHRA – many organizations recognize it as a strong alternative to traditional group health insurance plans.
“The customer data in this report shows that organizations of all sizes can leverage an ICHRA to provide their employees with a comprehensive, individualized health benefit to attract and retain top talent,” the report said.
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