For Employers · 2026
Group Health vs. ICHRA Cost Comparison
Enter your current group plan spend and a proposed ICHRA allowance to see a simple annual cost comparison — plus a side-by-side look at how the two models differ beyond cost.
What is an ICHRA?
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is an employer-funded benefit that reimburses employees, tax-free, for premiums on individual health insurance they purchase themselves — instead of the employer sponsoring a single group plan. The employer sets a defined monthly allowance (which can vary by employee class, such as full-time vs. part-time or by location); employees then shop the individual market, choose their own plan and carrier, and get reimbursed up to that allowance. There's no group participation minimum, and allowance amounts are entirely employer-controlled.
Figures shown are estimates only, based on the published data cited on this page. They are not a determination of eligibility, affordability, or benefit amount. Actual affordability and eligibility determinations require the applicable plan-year figures and your complete household information — confirm with a licensed advisor or the relevant government program before relying on these numbers.
Group health vs. ICHRA — beyond the numbers
Cost is only part of the decision. Here's how the two models compare on the factors many employers weigh:
| Factor | Group Health Plan | ICHRA |
|---|---|---|
| Cost predictability | Employer budgets a known % of a group premium that can still rise sharply at renewal. | Employer sets a fixed monthly allowance per employee class — cost is predictable and employer-controlled. |
| Administration | Employer manages a single group plan, renewal, and carrier relationship. | Employer manages the allowance and reimbursement process; employees shop and enroll individually (often with support tools). |
| Employee choice | Employees choose from the plan(s) the employer selected — typically one carrier, a few tiers. | Employees choose any ACA-compliant individual plan available in their county, including different carriers. |
| Participation requirements | Group plans generally require minimum participation rates to stay active. | No group participation minimum — allowances can be offered per eligible employee regardless of how many enroll. |
| Class flexibility | Generally one plan design per group, sometimes a few tiers. | Employer can define different allowance classes (e.g., full-time vs. part-time, by location) within IRS rules. |
Questions, answered
What is an ICHRA?
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is an employer-funded account that reimburses employees, tax-free, for premiums on individual-market health insurance they buy themselves, plus sometimes other qualified medical expenses. The employer sets a defined monthly allowance; employees choose and purchase their own individual plan.
Is this comparison a recommendation to switch to ICHRA?
No. Group coverage and ICHRA are both legitimate ways to offer health benefits, and the right fit depends on your workforce, budget, and goals. This tool is a cost comparison on your own numbers, not a recommendation.
Can I offer different allowances to different employees?
Yes, within IRS rules — ICHRA allows defining employee classes (such as full-time vs. part-time, salaried vs. hourly, or by location) and offering a different allowance amount to each class, as long as the classes are defined consistently and don't discriminate in prohibited ways.
Does this tool check if the allowance is affordable for my employees?
No — that requires current plan-year individual-market premium data for your employees' specific county and ages, which this tool doesn't have. An employee affordability checker is planned for a later phase; a licensed advisor can run real numbers for your group today.
Do employees have to buy individual coverage if we offer an ICHRA?
Generally, yes — to use ICHRA reimbursements tax-free, employees must be enrolled in individual health coverage (or Medicare). Employees who decline to enroll in individual coverage generally can't use the allowance for reimbursement.
Weighing group coverage against an ICHRA?
A local licensed advisor can walk through both models against your actual census and budget — free, no pressure. Also see our ICHRA Savings Estimator.