Why Offer an ICHRA?

An Individual Coverage Health Reimbursement Arrangement (ICHRA) allows employers of any size to reimburse employees tax-free for their individual health insurance premiums and certain qualified medical expenses. 

Instead of offering one-size-fits-all group coverage, employers provide a set monthly benefit, and employees choose the plan that works best for them.`

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Warehouse manager at work.

ICHRAs: Good for Employers

  • Lower health coverage costs
    In Colorado, individual market premiums are often 15–20% lower than comparable small group plans
  • You set the budget
    Define monthly reimbursement amounts and choose which classes of employees (e.g., full-time, part-time, seasonal) are eligible
  • Simple, scalable benefits
    Great for businesses of any size, including startups and nonprofits
  • Tax advantages
    Reimbursements are tax-free for you and your employees
  • Attract and retain talent
    Offering flexible, portable health coverage helps you stay competitive in today’s labor market
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Warehouse worker on the job.

For Employees: More Choice, More Control

  • Employees shop for their own plan on the individual marketplace
  • Choose the coverage that fits their needs, family, and budget
  • Keep their plan if they change jobs or move to a new area
  • Use the employer's contribution to pay for their premiums and qualified expenses
  • Access ACA-compliant coverage with essential health benefits

Frequently Asked Questions

Not at all! 

Any size business can offer an ICHRA. Even sole proprietors with eligible W-2 employees—can offer an ICHRA.

Yes, but it depends. If the ICHRA meets affordability rules, employees may not qualify for marketplace subsidies. Your broker can walk you through this.

  • Colorado’s robust individual marketplace includes local carriers with competitively priced plans.
  • Many employers in Colorado are turning to ICHRAs as a cost-effective alternative to traditional group plans—especially in resort, rural, and seasonal workforce communities.
  • Employees may qualify for state-based subsidies in addition to employer reimbursements, depending on how the ICHRA is structured.

ICHRA can’t be offered to the same class of employees receiving group coverage. But you can split eligibility by group (e.g., full-time vs. part-time).
 

Employers:

  1. Define your ICHRA strategy – Set a monthly contribution and identify employee classes.
  2. Partner with a broker or consultant – Ensure compliance with federal rules, marketplace timing, and participate in broker’s ICHRA platform.
  3. Educate your employees – Help them understand their options and how to shop for a plan.

Employees:

  1. Review employer’s ICHRA offer and monthly benefit amount.
  2. Shop for a plan on the individual marketplace through the employer’s ICHRA platform.
  3. Enroll and submit proof of coverage to the employer for reimbursement or direct pay.