A New Era of Employer Health Benefits

Every year, employers face the same challenge: rising premiums and limited plan options. Traditional group health insurance often forces businesses into rigid structures that don’t match the realities of today’s workforce. The result is frustration for both employers trying to manage costs and employees trying to find coverage that fits their lives.

A growing number of organizations are turning to a different model, one that combines flexibility with financial predictability. It’s called the Individual Coverage Health Reimbursement Arrangement, or ICHRA.

With ICHRA, employers provide a defined monthly allowance for health benefits, and employees use those funds to purchase their own individual insurance. This approach puts choice back into the hands of employees while giving employers greater control over spending.

Henderson Brothers, a leading insurance and employee benefits firm based in Pittsburgh, helps organizations across Western Pennsylvania and beyond design, implement, and manage ICHRAs that work for both sides of the equation.

What Is an ICHRA?

An ICHRA (Individual Coverage Health Reimbursement Arrangement) is an employer-funded benefit that reimburses employees, tax-free, for their individual health insurance premiums and eligible medical expenses. The employer decides how much to contribute each month, and employees purchase their own coverage through the Health Insurance Marketplace, directly from a carrier, or through Medicare if eligible.

When properly structured, ICHRAs meet Affordable Care Act (ACA) affordability and coverage requirements. This allows businesses of any size to remain compliant while giving their employees access to the same, or better, coverage options they would have under a traditional group plan.

Unlike group insurance, an ICHRA separates coverage from contribution. Employers define their budget, and employees decide how to spend it. This simple shift gives businesses long-term cost control and allows employees to tailor their coverage to their unique needs.

How ICHRA Works for Employers and Employees

For Employers

• Set a predictable monthly contribution that aligns with budget goals.
• Decide which employee classes are eligible (full-time, part-time, seasonal, or remote).
• Replace complex group plan renewals with a defined annual budget.
• Receive tax deductions for all employer contributions.
• Reduce administrative work with the help of a trusted benefits partner like Henderson Brothers.

For Employees

• Choose a plan that matches personal needs, network preferences, and family situations.
• Shop through the Individual Off-Exchange Marketplace, directly with insurers, or via Medicare if eligible.
• Receive tax-free reimbursement for premiums and, potentially even qualified medical expenses.
• Maintain consistent coverage even if their employment changes.
• Gain more control over benefits and overall healthcare choices.

With ICHRA, both employers and employees benefit from flexibility, cost transparency, and portability – something group plans rarely deliver.

Why More Businesses Are Switching to ICHRA

1. Cost Control and Predictability

One of the most compelling reasons employers adopt ICHRA is to stabilize their benefits spending. Instead of absorbing unpredictable renewal increases, businesses set their own contribution levels. This approach replaces uncertainty with clear financial planning.

For example, a Pennsylvania-based mechanical contractor working with Henderson Brothers saved $492,000 in annual healthcare costs after transitioning to an ICHRA. Employee satisfaction increased to 95 percent because each team member was able to select coverage that met their personal and family needs.

2. Simplified Compliance

ICHRAs meet ACA affordability and coverage standards when properly designed. Henderson Brothers ensures every plan aligns with federal regulations under 26 CFR §54.9802-4 and Department of Labor requirements. Employers can move forward with confidence knowing their plan structure is both compliant and sustainable.

3. Increased Employee Buying Power

ICHRAs empower employees to choose their own insurance rather than being confined to a one-size-fits-all group plan. In another Henderson Brothers case study, a Pittsburgh-based Non-Profit saved over $750,000 while 90% of their employees now pay nothing for their health insurance.  Employees felt more ownership over their benefits, leading to improved engagement and retention.

4. Flexibility for a Changing Workforce

Workforce mobility and remote employment have made group plans increasingly difficult to manage. ICHRA eliminates those barriers by working across states and employment types. Whether a team is hybrid, remote, or on-site, employers can provide equal access to healthcare while keeping administration simple.

How to Evaluate if ICHRA Is Right for Your Business

ICHRAs are a strong fit for employers who value flexibility, predictability, and employee engagement. While nearly any organization can adopt this model, certain traits make it especially effective.

Signs ICHRA Might Work for You

• Your business faces steep renewal increases each year with few alternative options in the market.
• You employ a mix of full-time, part-time, and remote workers.
• Your organization operates in multiple states.
• You want predictable budgeting and cost control.
• You want to offer more personalized benefits without adding administrative complexity.

Henderson Brothers helps employers determine whether ICHRA is the right fit through a feasibility analysis project that takes approximately 7-10 business days to complete. This process compares your current plan to an ICHRA model, identifies potential savings, and ensures ACA compliance before implementation.

The result is a clear, data-backed understanding of how ICHRA could work for your business – no guesswork, just practical insights.

Partnering with Henderson Brothers

For more than 130 years, Henderson Brothers has been helping organizations throughout build stronger, more sustainable employee benefits programs.

Their dedicated ICHRA team guides employers through every stage of implementation:

1. Feasibility Analysis – Evaluate cost savings and compliance fit.
2. Plan Design – Define contributions, eligibility classes, and coverage options.
3. Employee Education – Communicate changes clearly and build understanding through individual enrollment meetings.
4. Implementation and Support – Provide ongoing assistance for administration, renewals, and compliance.

Partnering with Henderson Brothers means gaining a strategic advisor, not just a broker. Our team combines deep industry knowledge with hands-on service to ensure ICHRA works as intended – saving money while improving the employee experience.

ICHRAs are redefining how businesses think about healthcare benefits. They provide flexibility, transparency, and choice, while bringing stability to employer budgets.

For organizations ready to move beyond the limitations of traditional group plans, ICHRA offers a smarter path forward.

Henderson Brothers is here to help employers throughout explore the advantages of ICHRA with confidence.

This is what partnership feels like

Contact Henderson Brothers today to schedule your feasibility analysis and see how individualized coverage can strengthen your benefits strategy for years to come.