An Individual Coverage Health Reimbursement Arrangement (ICHRA) offers several advantages over traditional group insurance, HRAs, HSAs, and FSAs.

Unlike traditional group insurance, where employers choose a single plan for all employees, ICHRA provides employees the freedom to select their own individual health insurance plans and get reimbursed for premiums and other medical expenses tax-free. This allows for greater personalization of coverage while helping employers control healthcare costs by setting fixed reimbursement limits. Compared to a traditional HRA, ICHRA has fewer restrictions and can satisfy ACA employer mandates, providing a modernized option for both small and large employers.

When compared to HSAs and FSAs, ICHRA stands out as it directly reimburses for insurance premiums, which HSAs and FSAs typically do not cover. HSAs require enrollment in high-deductible health plans (HDHPs) and offer the benefit of tax-free savings for healthcare costs, while FSAs allow pre-tax contributions but have stricter use-it-or-lose-it rules. ICHRA, with its flexibility, aligns well with employees’ varying healthcare needs without the limitations of specific plan types or rollover restrictions.

Key Differences Between ICHRA, Traditional Group Insurance, HRA, HSA, and FSA

This table illustrates the flexibility and tax advantages of ICHRA in comparison to other healthcare benefit options, highlighting the key differences in plan choice, cost control, premium coverage, and employee control.