New EBRI-Morgan Health survey on ICHRAs

Individual Coverage Health Reimbursement Arrangements (ICHRAs for short) were designed to bring more flexibility to employer-sponsored coverage: businesses can provide employees pre-tax dollars to purchase the individual health plan that works for them. As health care costs escalate, there's been a focus on the potential for ICHRAs to offer a more sustainable way to provide benefits – particularly for smaller businesses.

Smaller businesses are disproportionately burdened by rising health care costs, and those pressures can translate into difficult tradeoffs that affect hiring, wages and growth. Investing in new coverage options, like ICHRAs, is a key part of Morgan Health’s strategy to support business owners. Health care is also a focal point of JPMorganChase’s American Dream Initiative, which aims to connect smaller businesses with more affordable, viable benefit options that help them compete and thrive.

To better understand what’s driving ICHRA interest, Morgan Health partnered with the Employee Benefit Research Institute (EBRI) on a new survey of roughly 1,000 benefits decision-makers.

Among employers offering health coverage today, awareness of ICHRAs is meaningful but uneven: nearly six in 10 employers reported being at least somewhat familiar with ICHRAs, with familiarity highest among large employers that currently offer health benefits.

Read the full report

Here’s what we learned about interest and impact among smaller businesses:

ICHRAs can be an effective on-ramp to offering coverage for the first time

Compared with traditional small-group plans, ICHRAs can be simpler to administer – an advantage for smaller employers without dedicated benefits staff. That matters for businesses trying to take the first step into offering health benefits.

Among smaller businesses that don’t offer coverage today, 1 in 4 say they’d prefer an ICHRA over a traditional group plan. Yet 55% don’t know ICHRA is even an option, pointing to a clear need for education, practical implementation support, and “how to start” guidance. This is why we launched the Health Care Hub to help employers navigate benefit choices with clearer, transparent resources.

Smaller businesses want predictability and flexibility

Across employer sizes, the top-rated benefits of ICHRA are affordability for the employer, flexibility and more employee choice.

• Responses from smaller businesses highlight how employee experience remains central even when budgets are tight. About two-thirds offering benefits cited employee choice, preferences and needs as one of their top three reasons they would consider an ICHRA.
• About half cited flexibility of benefits design, affordability and predictability among their top reasons. Those priorities are particularly important amid the double-digit premium increases often seen in the small-group market.

Marketplace skepticism – especially about networks – hinders adoption

Concerns about the quality of plans on the individual health insurance marketplace are the biggest source of hesitation. Because ICHRAs reimburse employees for premiums and other eligible expenses on the individual-marketplace plans they choose, employer trust in marketplace networks directly affects adoption.

In fact, 89% of employers say they’d be more likely to adopt an ICHRA if they could expect group-plan-like network quality and choice. That finding underscores a central reality: ICHRAs can only reach their full potential if the individual market is transparent, stable and competitive – so employees can access quality providers, and employers can confidently stand behind the benefit.

Trusted advisors and peer validation can accelerate adoption

Finally, smaller businesses are more likely to move when a trusted expert or peer validates the path. Employers report they’d be more likely to adopt an ICHRA if their broker recommends it (77%) or if they see a peer adopt it (76%). For smaller businesses – who often juggle benefits decisions alongside everything else – trusted guidance can be the difference between interest and implementation.