Every year, the HRA Council publishes the most comprehensive look available at how ICHRA and QSEHRA adoption is actually playing out across the country. The newest edition, Growth Trends for ICHRA & QSEHRA, Volume Five: 2025-2026, just landed, and it's packed with data that validates the shift toward individual coverage HRAs as a serious, mainstream health benefits strategy.
We're proud to be one of 17 data providers behind this report, alongside a group of respected HRA administrators, enrollment platforms, and brokers. Below, we break down the numbers that matter most if you're an employer, broker, or benefits decision-maker trying to understand where this market is headed.
The headline number: Over half a million Americans covered
As of January 2026, ICHRA-covered lives surpassed 500,000. That figure combines known participating employees, their dependents, and a conservative "known unknown" adjustment to account for coverage the report's data providers can't directly see.
A few numbers behind that milestone:
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More than 20,000 US businesses now offer ICHRA or QSEHRA as a health benefit.
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Known participating employees reached 261,000, with known covered lives (employees plus dependents) at 402,000.
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The report's own data collection is estimated to represent only 75 to 80 percent of total ICHRA adoption nationally, meaning the real market is likely larger still.
The Council calls its published figures a "floor," not a ceiling. Given the pace of growth, 2027 is shaping up to be the year ICHRA proves it covers a full million Americans.
Larger employers are driving exponential growth
For years, ICHRA adoption was concentrated among small businesses. That's still true in terms of sheer volume, but the story in this year's report is how quickly larger employers are climbing on board.
Year over year growth in the number of eligible employees, broken out by employer size:
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Employers with 1,000 or more employees: up 178 percent
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Employers with 500 to 999 employees: up 105 percent
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Employers with 21 to 49 and 200 to 499 employees: up 128 percent each
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Employers with 6 to 20 employees: up 128 percent
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Employers with 50 to 99 employees: up 111 percent
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Employers with 100 to 199 employees: up 101 percent
Aggregated across all Applicable Large Employers (ALEs, meaning 50 or more full-time employees), ICHRA growth hit 108 percent. Even using the report's more conservative "prior year cohort" methodology, which only counts data providers who shared information in both 2025 and 2026, ALE growth still came in at 39 percent.
This matters because larger employers bring more experienced health care consumers into the ACA Marketplace, and the report ties this trend directly to a positive effect on ACA risk pools overall.
Employees are choosing better coverage, and they can afford it
One of the more compelling findings in the HRA Council’s report involves what employees actually do when they're handed an ICHRA allowance and a real menu of plan choices.
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81 percent of employees elect to spend more than their allowance for better coverage, a behavior the report calls "flexing up."
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The remaining 19 percent found a plan that was fully covered by their employer's allowance, some with money left over each month.
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The median allowance per covered life was $459, against a median premium of $567, meaning the median employee only flexed up by $105 out of pocket.
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On average, employer allowances covered 81 percent of the premium for employees' preferred plans.
Employees also skew younger and healthier than the broader ACA Marketplace population. For the 2026 plan year, 56 percent of Marketplace enrollments via ICHRA came from primary subscribers under age 45. Silver and Gold remain the most popular metal tiers, chosen by 32 percent and 34 percent of subscribers respectively, ahead of Bronze at 29 percent.
Small employers are the backbone, and many are new to offering coverage at all
Large employer growth is grabbing headlines, but small businesses still represent 80 percent of this year's adoption. And for many of them, ICHRA and QSEHRA aren't a replacement for a previous benefit. They're the first health coverage these businesses have ever offered.
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More than two-thirds of small businesses offering ICHRA in 2026 (over 2,200 employers) previously offered no health coverage at all.
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93 percent of small employers offering QSEHRA in 2026 (nearly 2,800 employers) were also new to offering coverage.
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Nearly a third of small employers who've adopted ICHRA moved away from the traditional small group market to do it.
Retention is strong across the board too. Once employers adopt an HRA, they tend to stick with it, which the report attributes to genuine satisfaction with the flexibility these arrangements offer.
Growth is happening in all 50 states
The report also confirms that ICHRA and QSEHRA adoption isn't a regional story. All 50 states showed growth, though the underlying drivers vary quite a bit by state.
A few standouts:
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California has the most employer headquarters offering ICHRA and QSEHRA, unsurprising given its population.
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Ohio, Texas, and Minnesota have the highest number of employees eligible for ICHRA and QSEHRA coverage.
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Arizona posted the highest year over year increase in employer adoption, a 655 percent jump in eligible employees, and its state legislature is now studying whether to extend ICHRA to state employees.
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Mississippi and New Hampshire have both introduced or passed ICHRA-related tax credit legislation for small businesses.
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Colorado, Georgia, Maryland, Pennsylvania, and Virginia are highlighted as states with especially favorable conditions for ICHRA, thanks to factors like reinsurance programs and competitive individual insurance markets.
Why this matters right now
This year's report lands at a genuinely uncertain moment for the ACA Marketplace. Enhanced Premium Tax Credits expired at the end of 2025, and millions of Americans were expected to feel the impact through higher premiums or lost subsidies. Meanwhile, a 2025 reconciliation bill expanded HSA eligibility to include Bronze and Catastrophic ACA plans, raising questions about whether employees would flock toward the cheapest possible coverage.
Despite all that turbulence, ICHRA adoption held steady and, by most measures, grew. Employees didn't rush to the bottom. They kept choosing Silver, Gold, and Expanded Bronze plans that offered stronger coverage and lower deductibles. That resilience is worth paying attention to if you're weighing whether ICHRA is a stable, long-term benefits strategy for your organization.
The bottom line
The data tells a consistent story. Employers of every size, in every state, are moving toward defined contribution health benefits, and their employees are responding by choosing meaningful coverage they can actually afford. Whether you're a small business offering health insurance for the first time or a large employer looking to modernize your benefits strategy, the trends in this report point in one clear direction.
Want the full picture? The complete Growth Trends for ICHRA & QSEHRA report includes additional detail on enrollment behavior, employer size breakdowns, and state-by-state trends beyond what we've covered here.
Our team can walk you through your specific numbers, model out what an ICHRA allowance could look like for your employees, and help you figure out whether now is the right time to make the switch. If you're ready to see what these trends could mean for your own organization, reach out to Take Command.
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