The large employer shift: What 2026 data reveals about ICHRA adoption among ALEs

For years, the conventional wisdom held that individual coverage health reimbursement arrangements were built for small businesses. A 15-person agency or a growing startup could make the switch with relative ease, while companies with hundreds or thousands of employees stayed with the group plans they had always known.

New data suggests that assumption no longer holds. Take Command's 2026 Large Employer Data Report draws on two major data sources to show that applicable large employers (ALEs) are adopting ICHRA (now called CHOICE Arrangement) faster than ever, with the largest employers showing the strongest growth.

Below, we break down the most important findings and what they mean for HR leaders, benefits teams, CFOs, and the brokers who advise them.

Key takeaways from the 2026 Large Employer Data Report

If you only have a minute, here is what the data shows:

• ALE adoption more than doubled. 2,663 ALEs offered ICHRA in 2026, a 110% increase over 2025.

• The biggest employers grew fastest. Adoption among employers with 1,000 or more employees rose 178% from 2025 to 2026.

• Group coverage has lost much of its cost edge. Group insurance was the more affordable option 80% of the time in 2017, compared with 50% in 2026.

• The model is sticky. 77.4% of ALEs offering ICHRA in 2026 already offered it in 2025.

• Real-world savings are significant. One Take Command customer, a Utah nonprofit, saves about $500,000 a year after moving away from group coverage.

ICHRA has a new name: CHOICE Arrangement

Before digging into the numbers, a quick note on terminology. In September 2026, the Centers for Medicare & Medicaid Services (CMS) and the U.S. Small Business Administration (SBA) began referring to ICHRA as CHOICE Arrangement, short for Custom Health Option and Individual Care Expense Arrangement.¹ ²

The change is in name only. The rules governing eligibility, contributions, employee classes, and ACA compliance remain exactly the same. New name, same benefits. Because most employers and brokers still use the term ICHRA, you will see both names used throughout this article.

Large employer adoption more than doubled in 2026

The ACA generally defines an ALE as an employer that averaged at least 50 full-time employees, including full-time-equivalent employees, during the previous calendar year. Since ICHRA launched in 2020, the model has grown consistently, although growth among large employers has historically trailed growth among small businesses. That hesitation makes sense, since moving 200 employees to a new benefits model requires far more change management than moving 20.

The latest data shows that gap closing. According to the 2026 HRA Council Data Report, which analyzed employer and employee data from 17 ICHRA platforms, the number of ALEs offering ICHRA has climbed steadily year over year:³

• 2021: 79 ALEs

• 2022: 168 ALEs (113% growth)

• 2023: 700 ALEs (317% growth)

• 2024: 944 ALEs (35% growth)

• 2025: 1,267 ALEs (34% growth)

• 2026: 2,663 ALEs (110% growth)

The 2026 figure also represents a 182% increase over 2024. After two years of steady but moderate gains, large employer adoption accelerated sharply.

Growth was strongest among the largest employers

The report breaks down 2025 to 2026 adoption growth for three employer size bands:

• 200 to 499 employees: 137 to 313 employers (+128%)

• 500 to 999 employees: 37 to 76 employers (+105%)

• 1,000+ employees: 18 to 50 employers (+178%)

The 178% increase among companies with 1,000 or more employees is by far the highest growth rate in the report.

These numbers are a floor

It is worth keeping the scope of the data in mind. The 17 platforms represented in the HRA Council report make up just over half of the 30 ICHRA platforms currently operating in the market, which means real adoption among large employers is almost certainly higher than these figures show.

Why large employers are rethinking group coverage

Rising costs of health insurance are the most obvious driver. According to KFF's 2025 Employer Health Benefits Survey, average annual premiums for employer-sponsored family coverage reached $26,993, a 6% increase over 2024 that outpaced both wage growth and inflation.⁴

For CFOs, the challenge extends beyond any single year's increase. Every year, finance teams wait to learn what their group renewal will be, and double-digit increases can stack up over multiple years. Budgeting for benefits becomes a matter of waiting to see what the carrier proposes.

ICHRA changes that dynamic in important ways:

• Employers set the budget. Each year, the company decides whether to increase the allowance it provides employees.

• Costs become predictable. A defined monthly contribution replaces an uncertain renewal rate.

• Employees gain choice. Each person selects the individual plan that best fits their needs and budget.

• Allowances can be tailored. Employers can offer different amounts to different employee classes, such as full-time and part-time staff or employees in different rating areas.

The cost advantage is shifting toward the individual market

The second data source in the report comes from Ideon, a leading provider of health insurance and benefits data. Take Command analyzed nine years of filed rates from 2017 through 2026, comparing the least expensive available group plan with the least expensive available individual plan for a 27-year-old before subsidies.

Group insurance grew more expensive every year

The findings point to a clear long-term trend:

• The group market grew more expensive every single year from 2017 to 2026.

• The individual market got less expensive during five of those years.

• In the median county, the cost of the least expensive group plan rose 70% over nine years, compared with 51% for the cheapest individual plan.

• In 2017, group insurance was the more affordable option 80% of the time. By 2026, that figure had fallen to 50%.

For years, large businesses viewed group insurance as the only viable option because it was both familiar and, in most cases, more affordable. That second advantage has eroded considerably.

Location matters

The report is clear that the data is not one-size-fits-all. There are still areas of the country where employers will find more affordable rates on the group market. In other areas, the picture is decisive. In Cincinnati, for example, the least expensive individual silver plan is 62% cheaper than the least expensive group plan, a gap that has held for the past five years.

That finding aligns with the HRA Council data, which identified Ohio as the state with the largest number of employees eligible for an employer's HRA offer. For any employer focused on controlling benefits costs, the takeaway is practical: when planning your health benefits, research whether individual plans are more affordable in the states and counties where your employees live.

Employers who make the switch tend to stay

Adoption growth tells only part of the story. The HRA Council report also found that large employers who move from group insurance to an HRA are consistently satisfied with that decision, and that the vast majority of employers who adopt ICHRA keep it.

The breakdown of where 2026 ALE ICHRA offerings came from illustrates how sticky the model is:

• 77.4% already offered ICHRA in 2025

• 21.6% switched from a group plan

• 0.9% offered health benefits for the first time

According to the report, the core appeal for large employers is cost consistency. With ICHRA, companies decide whether to increase allowances each year, giving them full control over their benefits spend.

Importantly, that cost control does not require a trade-off in employee satisfaction. The transition does call for thoughtful education and change management, yet each employee gains the ability to choose the plan that best meets their needs and budget.

How CHOICE Arrangement supports ACA compliance for large employers

For ALEs, any benefits strategy must satisfy the ACA's employer shared responsibility provisions, often called the employer mandate. An ICHRA can help an ALE satisfy the employer mandate when qualifying coverage is offered to at least 95% of its full-time employees and their dependents and the offer is affordable.

How the affordability test works

An ICHRA offer is considered affordable when the employee's cost for the lowest-cost silver plan in their rating area, after subtracting the employer's monthly allowance, does not exceed a set percentage of household income. For plan years beginning in 2026, that affordability percentage is 9.96%, up from 9.02% in 2025.⁵

Because employers rarely know an employee's household income, the IRS allows employers to use safe harbors based on:

• Form W-2 wages

• Rate of pay

• The federal poverty line

Employers can also use the employee's primary work site, rather than their home address, to determine the relevant silver plan.

What is at stake

Getting affordability right matters. For 2026, the penalty for failing to offer coverage to at least 95% of full-time employees is $3,340 per full-time employee, excluding the first 30. The penalty for offering coverage that is unaffordable or fails to provide minimum value is $5,010 for each full-time employee who receives a premium tax credit.⁶

Working with an experienced administrator helps ALEs set allowances by class that meet affordability requirements while staying within budget.

The bigger picture: A stronger individual market

Large employer adoption may also benefit the individual market itself. Over the past two years, industry observers have warned of a potential "death spiral," in which rising costs push people to drop coverage, shrinking the risk pool and driving costs even higher.

The ACA's economic advantage is the size of its risk pool, where millions of individual market enrollees help spread out the cost of high claimants. ICHRA adoption among large employers could help stop a death spiral. When an employer moves dozens, hundreds, or thousands of employees into the individual market, those employees directly strengthen the ACA risk pool. The HRA Council has similarly noted that ICHRA enrollment brings a predominantly younger group of employees and dependents into the market.³

That creates the potential for a virtuous cycle:

1. More ALE adoption brings more employees into the individual market through ICHRA.

2. A broader risk pool spreads risk across more covered lives.

3. Potential stability supports competition and affordability over time.

The Ideon data already offers a promising signal, since the individual market became less expensive year over year in five of the nine years measured. A stronger individual market, in turn, makes ICHRA an even more attractive option for employers facing unpredictable group renewals.

What this means for your organization

The 2026 data carries different implications depending on your role.

For HR and benefits teams

• Evaluate whether individual market plans in your employees' locations offer competitive options.

• Consider how employee classes could help you tailor allowances for different parts of your workforce.

• Plan early for employee education, since clear communication drives a smooth transition.

For CFOs and finance leaders

• Compare multiyear group renewal trends against the predictability of a defined contribution.

• Model how allowances by class would affect your total benefits spend.

• Factor administrative time savings into your cost analysis.

For brokers

• Use county-level rate data to identify clients where individual plans are more competitive.

• Position ICHRA as a proven option for large clients, backed by growing adoption data.

• Partner with an experienced administrator to manage compliance, enrollment, and ongoing support.

Explore the full 2026 Large Employer Data Report

CHOICE Arrangement (formerly ICHRA) has moved well beyond its early reputation as a small business solution. The 2026 data shows large employers adopting it at an accelerating pace, staying with it once they switch, and finding meaningful savings in markets where individual coverage has become more competitive.

To see the complete findings, charts, and analysis, download the 2026 Large Employer Data Report.

Ready to explore what ICHRA could look like for your organization or your clients? Connect with a Take Command expert to review your options, run the numbers, and build a plan that fits your workforce.

References

1. Centers for Medicare & Medicaid Services. "CHOICE Arrangements: A Guide for Employers." https://www.cms.gov/choicearrangements

2. Centers for Medicare & Medicaid Services. "CMS, SBA, and Georgia Recognize Innovative CHOICE Arrangements as Major Win for Small Businesses." September 14, 2026. https://www.cms.gov/newsroom/press-releases/cms-sba-georgia-recognize-innovative-choice-arrangements-major-win-small-businesses

3. HRA Council. "Strong ICHRA Growth Among Large Employers Strengthens ACA Marketplace and Risk Pool, HRA Council Report Finds." PR Newswire, August 12, 2026. http://www.prnewswire.com/news-releases/strong-ichra-growth-among-large-employers-strengthens-aca-marketplace-and-risk-pool-hra-council-report-finds-302849192.html

4. KFF. "2025 Employer Health Benefits Survey." October 22, 2025. https://www.kff.org/health-costs/report/2025-employer-health-benefits-survey/

5. Internal Revenue Service. "Revenue Procedure 2025-25." July 18, 2025. https://www.irs.gov/pub/irs-drop/rp-25-25.pdf

6. Internal Revenue Service. "Revenue Procedure 2025-26." July 2025. https://www.irs.gov/pub/irs-drop/rp-25-26.pdf