The Financial Benefits of ICHRAs for Small and Mid-Sized Businesses

Why SMBs are the fastest-growing adopters of Individual Coverage Health Reimbursement Arrangements.

Breaking the Barrier to Entry

For years, countless small businesses wanted to offer health benefits to attract and retain talent, but simply couldn't afford the sky-high premiums and rigid participation requirements of traditional group plans. ICHRA entirely removes the barrier to entry. An employer can start offering benefits with a budget of just $200 per month per employee.

Tax Advantages

ICHRA is not a taxable stipend. It is a formal, IRS-compliant health reimbursement arrangement. Employer contributions are fully tax-deductible as a business expense, and the reimbursements received by the employees are entirely tax-free. Furthermore, employees can pay any remaining premium balance using pre-tax payroll deductions.

Cost Containment

With an ICHRA, an SMB will never be hit with a surprise 25% rate increase at renewal time due to a single employee's severe illness. The financial risk of healthcare inflation is shifted from the business to the broader individual market pool. The employer's budget is fixed, predictable, and fully under their control year over year.