Individual Coverage Health Reimbursements continue to see a lot of traction in the market, especially in Western Pennsylvania and Eastern Ohio.
In the 2025 Growth Trends for ICHRA report published recently by the HRA Council, it was reported that 2025 saw a 49% year-over-year increase in ICHRA adoption amongst employers with 100-199 employees and an overall increase in adoption of 34% across employers with greater than 50 employees. Since 2020, ICHRA adoption is up 1000%.
The majority of this interest and adoption is being fueled by the combination of a robust and competitive individual health insurance market along with higher-than-average increases in the traditional group health insurance market, especially in the 50-250 employee segment.
Within the off-exchange individual marketplace, where most ICHRA policies are purchased, the growth of ICHRA has led to several years of market stabilization and therefore lower than average increases. According to the HRA Council report, the 18-44 age group is still the largest ICHRA segment (>50%) further strengthening the risk pool and driving long term affordability. In the group insurance market, trend increases on medical and prescription drug coverage have typically hovered between 9-13% according to Milliman. In 2025, according to the Kaiser Family Foundation (KFF), the median increase on the individual market was just 7%. Locally here in Western Pennsylvania, the median increase was 6-8% in 2025.
While Henderson Brothers expects to see continued steady growth and adoption in ICHRA as we head into 2026, recent and potential future legislative changes could provide newly added instability and uncertainty around the individual marketplace.
One of the principles of the Affordable Care Act was government subsidies for individuals at certain income levels to purchase medical insurance on the federal or state exchanges. In 2021, the Federal Government extended individual market subsidies to individuals with household income of up to 400% of the Federal Poverty Level. These subsidies along with the advent of ICHRA plans have led to significant enrollment surges in both on- and off-exchange plans across the country, further leading to additional individual market and price stabilization. (Note: ICHRA plans utilize off-exchange plans but allow for employer subsidies, however, carriers do not distinguish between on- and off-exchange individual plans for purposes of plan designs and pricing).
These enhanced subsidies are scheduled to expire at the end of 2025 and extending these subsidies was not included in the One Big Beautiful Bill that was passed by Congress and signed by President Turmp earlier in July. The direct omission of the extension of the subsidies has led to many of the carriers operating in the individual market to re-file or retract their initial filings for individual rate pricing for 2026. (Note: As part of the Affordable Care Act, all carriers offering plans in the individual marketplace must file their proposed premium increases with their state Insurance Commissioner for approval. The state Insurance Commissioner has the ultimate decision-making authority on premium increases.)
While it is still possible that Congress could vote to extend the enhanced subsidies by the end of the year, carriers are bracing for big changes in the individual market pricing which means employers and employees that are currently in an ICHRA or considering an ICHRA need to also be prepared as well.
If the enhanced subsidies are allowed to expire, this will lead to a significant increase in premiums for those individuals purchasing subsidized coverage on the exchange. Carriers are concerned that higher pricing due to a loss of subsidized coverage will lead to healthier individuals dropping coverage while sicker individuals maintain their coverage, despite the higher cost, ultimately leading to a smaller and sicker pool of members.
This concern is driving up the initial 2026 proposed pricing from carriers across all states. According to the Kaiser Family Foundation, most insurers are asking for median premium increases of 10-20% with carriers including an additional 4% rate load for the expiration of the enhanced subsidies. This is the largest proposed increase since 2018. In a recent Wall Street Journal article titled “Obamacare Insurers Seek Double-Digit Premium Hikes Next Year”, of the states that have released the proposed rate hikes, the range requested is anywhere from 8% to more than 27%. Neither Pennsylvania nor Ohio are cited in the article as the proposed increases from carriers operating in these states have not yet been publicly released by the Insurance Commissioner’s Office. Final decisions on rate increases will not be made available until October 2025, at the earliest. Open enrollment for the 2026 individual market plans begins on November 1, 2025.
Planning Ahead
We realize that this information can be disconcerting to many of you, especially if you are currently utilizing an ICHRA, planning to implement an ICHRA for 2026 or are seriously considering implementing an ICHRA for 2026. Our recommendation at this time is to be vigilant but patient and don’t panic! At this time, we cannot speculate on the increases that could be coming in Pennsylvania & Ohio but we will be monitoring the situation closely. If you already have an ICHRA in place, we recommend beginning a process to plan for how you might want to consider adjusting your 2026 ICHRA employer subsidy in light of this information. If you are planning to implement an ICHRA for 2026 or evaluating an ICHRA versus your current group arrangement, you should consider adjusting your forecasted numbers upward in line with the reporting of the Kaiser Family Foundation while keeping in mind that you likely have not yet received your group insurance renewal rates yet.
Henderson Brothers will be monitoring this situation closely and we are in regular contact with the major carriers operating in Pennsylvania and Ohio so we can have a better idea of what to expect as it relates to individual marketplace premiums for 2026.
