Why ICHRAs Often Save Employers Money

With an ICHRA, you set a fixed monthly allowance rather than paying unpredictable group plan premiums that can rise 8–12% annually. This shifts cost risk away from the employer—if market rates increase, your budget stays the same. You also avoid underwriting penalties from a small group’s high claims year, and you aren’t locked into one carrier or network that might not fit all employees. Many businesses redeploy these savings into competitive hiring packages or higher allowances for critical roles, creating a benefits program that’s both financially sustainable and attractive to talent.

Safe harbors & ERISA overlay.

The ACA affordability rate for ICHRAs in 2026 is 9.96% of household income. This matters because:

  • If your ICHRA is affordable, employees generally cannot take Marketplace premium tax credits.
  • If it is not affordable, employees may opt out and potentially receive credits.

Large employers should use IRS safe harbors (W-2, Rate of Pay, Federal Poverty Line) for affordability testing—documenting this process is part of good ERISA fiduciary practice.

Budgeting tips:

  • Model allowances using the lowest-cost Silver plan in each employee’s ZIP code. You can use this Window Shopping Tool to estimate needed allowances. https://app.takecommandhealth.com/health-plan-search
  • Use permitted classes to adjust allowances for different employee groups. Examples include salary vs hourly, by rating area or a collective bargaining agreement.
  • Keep in mind any applicable state or local mandates that may override your ICHRA design.

Let us run a side-by-side cost and compliance analysis comparing ICHRA to your current or planned group plan—see exactly how much you could save.”

Related Resources:

ICHRA 101 Overview:: https://gobenefits.com/ichra-101-a-modern-alternative-to-traditional-group-health-insurance/

ICHRA Compliance Checklist:: https://gobenefits.com/ichra-compliance-reporting-an-employers-checklist/

Best-Fit Scenarios for ICHRAs:: https://gobenefits.com/when-an-ichra-makes-the-most-sense-and-when-it-doesnt/ 

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About the author

Clinton Wolf

Clinton Wolf works with businesses to make employee benefits easier to understand, manage, and implement. His focus is on helping employers navigate group health insurance and benefits administration while reducing the complexity that often comes with plan selection, enrollment, and ongoing benefits management.

Through his work with GoBenefits, Clinton helps companies evaluate their benefits options, manage employee enrollments and updates, and streamline ongoing administration. His approach focuses on helping employers make informed benefits decisions while reducing manual work, improving accuracy, and creating a more efficient experience for both businesses and their employees.

Clinton Wolf