SHRM26 Debrief · Compensation & Benefits · #3734

Empowering Employees with ICHRAs: A Personalized Approach to Health Benefits

with Alan Silver

& Anthony Murphy

& Hunter Foster

▶ Watch on the SHRM portal ~91 min, distilled

ICHRAindividual coverage health reimbursement arrangementdefined contribution benefits

"It's not that we couldn't do it, they just never asked us to."

What it was about

ICHRA (Individual Coverage Health Reimbursement Arrangement) offers a viable, increasingly mature alternative to traditional group health insurance: employers set a defined contribution, and employees personalize their own coverage in the individual market. Paired with strong education and administration, that can lower and stabilize costs, increase choice, and improve satisfaction.

By the numbers

40% down to 19% turnover

turnover reduction reported by one food and beverage employer after implementing ICHRA

20 to 30% differentials

cost savings some employees see by choosing a narrower-network individual plan vs. a broad PPO

eight grand versus 20 grand

audience member's comparison of out-of-pocket maximums between an ICHRA plan and their group plan

Key notes

Interview third-party administrators and brokers/consultants specifically about their ICHRA implementation experience before switching — treating ICHRA like group insurance administration sets employers up to fail.
Set contribution schedules that follow the individual market's age-based rate curve (a percentage of a benchmark plan) rather than flat dollar amounts, which over-subsidize younger employees and under-subsidize older ones.
Budget for two months of premium due at the start of an ICHRA transition instead of the usual one month, since finance needs to plan for this cash timing shift.

The contrarian takeGroup health insurance is often assumed to be more equitable and stable than the individual market. Panelists argued it's actually more inequitable, because cross-subsidization by age, geography, and health status is simply hidden from view, whereas ICHRA makes those tradeoffs visible and lets you manage them more precisely through contribution design.

Take this back Monday

Do this for your team

Pull your health plan opt-out rate; if it's 30%+, ask your broker about ICHRA feasibility and age-based contribution modeling.

Say this in your next leadership meeting

Group insurance isn't more equitable than ICHRA, it just hides the cross-subsidization by age and geography instead of managing it deliberately.

Watch out for

Assuming employees will pick the 'wrong' plan by employer standards — individual buying behavior in the ICHRA market does not mirror employer assumptions (e.g., PPOs are bought by less than 15% of Ambetter's ICHRA population despite being offered).
Giving every employee the same flat-dollar contribution regardless of age, which creates inequitable subsidization skewed toward younger employees.
Treating ICHRA administration and broker relationships the same as group insurance — using an administrator or advisor without dedicated ICHRA implementation experience lowers the odds of success.

Fun fact · Hunter Foster

Before benefits strategy, Hunter Foster was a registered nurse who helped lead his city's largest COVID unit at the height of the pandemic.

If this landed, see these

↳ Go deeperFuture Proofing Your Health Benefits: A Panel Discussion on Multi Year Planning and High Performance Program DesignICHRA hands employees the individual market; this session applies the same fiduciary rigor to a group plan.⇄ The counterpointFuture-Ready Benefits: Balancing Cost, Care, and Employee ExperienceICHRA solves cost and choice by leaving group insurance; this session gets both without leaving it.✦ The unexpected oneThe Chief Disruption Officer: Architecting Tomorrow’s Workforce EcosystemDitching group insurance for ICHRA is the benefits version of the disruption this session asks HR to lead everywhere.