Group health insurance premiums rose an average of 10% in 2025. For small and mid-sized businesses, that kind of increase year after year makes planning nearly impossible. At the same time, a newer option called ICHRA has been gaining traction fast, with adoption among small businesses jumping 52% in the same period according to the HRA Council.
If you are wondering whether to stick with your group plan or make the switch, here is what you need to know.
What Is ICHRA?
An Individual Coverage Health Reimbursement Arrangement, or ICHRA, allows employers to reimburse employees tax-free for individual health insurance premiums and qualified medical expenses, rather than purchasing a single group plan for everyone. Employers set a fixed monthly reimbursement amount, and employees shop for the coverage that works best for them.
Key Differences
- Cost predictability: ICHRA gives you a fixed monthly budget, and more predictable costs from year to year (thanks to a larger risk pool). Group plans are subject to unpredictable annual increases based on claims and carrier decisions.
- Employee flexibility: With ICHRA, employees choose their own plan from the individual market. With a group plan, everyone shares the same two or three options.
- Participation requirements: Group plans typically require 60 to 75% of eligible employees to enroll. ICHRA has no participation minimum.
- Administrative complexity: ICHRA administration has become much simpler with modern platforms. Group plans require ongoing carrier management, renewals, and compliance tracking.
- ACA compliance: Both options, when properly structured, can satisfy ACA requirements.
Which Is Right for Your Business?
ICHRA tends to work well for businesses with remote or multi-state employees, companies that want predictable benefit costs, and employers where a one-size-fits-all group plan creates friction. Group plans may still be the right fit for teams where familiarity and simplicity matter most.
The honest answer is that the right choice depends on your headcount, your budget, and how your team is structured. At Benefits Ninja, we evaluate both options and make the recommendation that actually fits, not the one that is easiest to sell.
Not sure which option fits your team? Get a free Ninja Review.