As employer interest in individual coverage health reimbursement arrangements surges, health plans need to prepare for the operational realities of the ICHRA model.
The HRA Council reported ICHRA adoption increased 52% among small employers and 34% among applicable large employers in 2025.
ICHRA isn’t a product, but rather a new distribution model for off-exchange plans.
In these arrangements, employers provide a stipend for employee health insurance purchases instead of offering traditional group coverage.
Many employees use this money to shop for plans directly from a health plan or through an ICHRA-friendly broker.
This shifts how enrollment, attribution and payment behave.
See also: ICHRA popularity ‘skyrocketing’ as benefits costs rise
The challenge with ICHRA
ICHRA operates within a decentralized, multi-stakeholder ecosystem, yet members and employers still expect a consistent experience.
Health plans must understand these three operational dynamics to support ICHRA at scale:
1. ICHRA operates in a fragmented ecosystem
ICHRA requires health plans to work in a multi-party ecosystem made up of ICHRA administrators, benefit technology (BenTech) platforms, brokers and employers.
More than $700 million in ICHRA startup investments has created a continuous stream of new vendors entering this already crowded market.
These organizations vary widely in technical maturity, data quality and operational rigor.
In practice, this environment means enrollment is highly decentralized.
Each employee may select coverage directly through the health plan, a third-party platform or Marketplace.
For a company of 20 employees, it’s possible they will enroll in 20 different plans, and carriers could receive each person’s information from a different vendor.
Each platform or system has its own unique file formats, processes and payment cadences.
This creates a disorganized flow of information.
Traditional technology infrastructure can’t manage this complexity, especially as ICHRA membership grows.
Plans need flexible, integrated systems that enable collaboration but don’t increase operational overhead.
2. ICHRA breaks standardized enrollment workflows
In a traditional group model, enrollment is centralized and predictable.
The employer selects the plan options, enrollment occurs during a defined window, and health plans receive a standardized enrollment file tied to a single employer and effective date.
On-exchange enrollments are similarly standardized.
Members join directly through an exchange or carrier channel, data follows established formats and timelines, and payment responsibility is clearly defined.
ICHRA is an entirely different beast.
It combines employer funds with individual plan selection across multiple platforms and administrators.
Enrollment data comes from many different sources, on variable schedules and in nonstandard formats.
Monthly premiums may be paid by employers, employees, ICHRA administrators or some combination of those.
These funds can arrive asynchronously and must be reconciled at the individual member level without a centralized enrollment system of record.
As a result, health plans must apply, track and reconcile premium payments across multiple payers for the same member in the same coverage period.
This reality creates additional administrative burdens and the potential for mistakes that impact member coverage and experience.
3. ICHRA complicates member identification and reporting
Because people use their ICHRA funds to enroll individually, health plans can’t reliably distinguish these members from completely self-funded members.
This lack of visibility limits a plan’s ability to segment members and track ICHRA performance.
Without this insight, organizations can’t confidently adjust pricing, networks or benefits to optimize both ICHRA and Individual market offerings.
Meanwhile, ICHRA enrollees can encounter disjointed experiences across enrollment and plan management, especially when it comes to coverage transitions like employer changes.
The result is often confusion, but the fragmentation can also trigger payment and coverage approval issues. And customer service representatives have no immediate visibility into how the member enrolled, how premiums are funded or which third parties are involved.
This makes issue resolution more difficult.
Building systems to support ICHRA at scale
To successfully offer ICHRA, health plans can’t treat this model as an add-on.
They must incorporate ICHRA strategies into long-term road maps, adding dedicated team members to manage this business line.
The number of parties involved in ICHRA administration requires systems that can maintain continuous coordination for consistent data exchanges, reliable member identification and seamless workflows.
Legacy infrastructure won’t cut it.
Building one-off integrations for every new admin or partner will quickly create technical debt and headaches.
Health plans need to build infrastructure that can flex across group, individual and ICHRA-funded populations.
Leaders at Community First Health Plans wanted to offer ICHRA to their members.
They told us they needed a way to manage the complete ICHRA member lifecycle with a single solution that also worked for its other business lines.
A system with built-in connections gives the organization the ability to offer members more choices while maintaining its personalized, community-focused approach.
ICHRA will support long-term Individual Market growth
A recent industry analysis suggests ICHRA-funded members can help health plans overcome the current Individual market turbulence caused by policy uncertainty and subsidy expirations.
Proposed legislation seeks to codify ICHRA (and rename the plans Custom Health Option and Individual Care Expense, or CHOICE, arrangements).
At the same time, more employers seek relief from high and unpredictable group plan costs. Under these conditions, ICHRA adoption will likely gain momentum.
Health plans should prepare themselves to serve this market.
Fragmentation and nonstandard data are structural characteristics of ICHRA administration, and the complexity will scale with membership growth.
Health plans must tackle these realities head-on, developing long-term strategies and investing in systems to manage the expanding volume of ICHRA-funded members and partners.
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