What an ICHRA is
An individual coverage health reimbursement arrangement (ICHRA) lets an employer reimburse employees, tax-free, for individual health insurance they buy themselves. Federal rules have allowed ICHRAs since 2020. The employer sets a monthly allowance for each class of employee; each person picks a plan, usually on the ACA marketplace, and gets reimbursed up to the allowance.
Two rules shape every ICHRA. You can't offer the same class of employees both an ICHRA and a group plan. And for 2026, an ICHRA counts as affordable only if the employee's cost for the lowest-cost silver plan, after the allowance, is no more than 9.96% of household income.
The math your employees face
PeopleKeep's ICHRA report found that small employers offered single employees an average allowance of $583 a month in 2025. That was enough for a benchmark silver plan in many places that year. Then individual-market insurers raised premiums by about 26% on average for 2026, after the enhanced premium tax credits expired.
Age makes it worse. ACA plans can charge older adults up to three times what they charge a 21-year-old, so the same allowance covers much less for a 55-year-old engineer than for a new grad. Whatever the allowance doesn't cover, the employee pays, on top of a deductible that is often thousands of dollars.
Where an ICHRA works well
- Teams spread across many states where one group network is genuinely hard to build.
- Companies that need a strictly fixed per-employee budget and accept that employees will end up on very different plans.
- Part-time or seasonal classes you don't want on the group plan.
ICHRA vs. a Prescience plan
| ICHRA | Prescience | |
|---|---|---|
| What employees get | An allowance to buy an individual plan | One company plan with an effective $0 deductible and simple copays |
| Employer cost | Allowance per class, plus platform fees | One monthly contribution set in your quote, $0 admin fees |
| Exposure to individual-market prices | Full | None. It's a group plan |
| Network | Whatever each employee's plan includes, often narrow | Broad national PPO network plus direct-contract providers |
| Employee effort | Shop, enroll, submit proof, request reimbursement | Enroll once; pay copays with the Prescience card |
| Care support | Depends on each insurer | 24/7 physician-led care navigation for everyone |
How a Prescience plan works
At Prescience, we design and run your company's health plan, from setup and enrollment to claims, compliance and COBRA. What your team gets:
- An effective $0 deductible, so the plan helps from the first visit.
- Simple copays shown before a visit, capped by a low out-of-pocket maximum.
- A broad national PPO network, plus providers we contract with directly.
- 24/7 physician-led care navigation: a care team that finds the right provider, books appointments and explains costs up front.
What your company gets: one monthly cost set in your quote, usually 10–20% below comparable fully insured coverage and fixed before the plan starts, with no admin fees. You keep your payroll provider, and the plan can start mid-year.
How I'd choose
If your top priority is a hard per-head budget and your team is comfortable shopping for its own coverage, an ICHRA is a legitimate tool. If you want benefits that help you hire, compare a Prescience quote against your ICHRA allowance plus platform fees. Teams are often surprised that one group plan costs about the same and gives everyone far more.
I go deeper on this in Is ICHRA a scam for your employees? and Is Thatch ICHRA worth it?.
See what your team would pay with Prescience
Answer a few questions about your team and get a quote in about 60 seconds, or talk it through with one of our benefits experts.
