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ICHRA Pros and Cons

Is an ICHRA right for your business?

Reimburse your employees tax-free with the industry’s only ICHRA platform with hands-on enrollment support. 

  • Manage benefits for an hour or less per month
  • No more surprises, renewals, or participation rate concerns
  • A smart, hands-off alternative to group health insurance
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ICHRA plan highlights

Take Command makes ICHRA administration simple and easy.

Flexible Designs

No more one-size fits all plans! ICHRA plans can be customized and designed to achieve you or your clients’ goals. 

Simple Administration

Take Command will automatically generate the documents your employees need and can help them search for and enroll in a plan online.

No Contribution Limits

There are no annual contribution caps. This allows employers to define unrestricted benefit budgets.

Learn More

Want to dive into the details of the individual coverage HRA? 

Our ICHRA Guide will walk you through how ICHRAs work, ICHRA benefits, and ICHRA setup. 

ICHRA Health Insurance

Join the 5,000+ businesses saving on health benefits with Take Command

Union Orthotics and Prosthetics

"Facing a 40% renewal, our broker introduced us to the idea. Take Command provides the tools there for everybody to enroll in very easy formats on the platform."

Read Case Study

Taro Health

"To attract and maintain talent, we needed benefits. Managing our ICHRA has been simple and hands-off. I spend two hours a month managing and administering it."

Read Case Study


"Take Command has made it simple to set up and administer the small business HRA for StreamCare and we highly recommend it to other small businesses."

Read Testimonial

ICHRA Pros and Cons

An Individual Coverage Health Reimbursement Arrangement (ICHRA) is an innovative type of health coverage plan that allows employers to provide health benefits to employees without being boxed into traditional group health insurance. ICHRA is an increasingly popular option among employers of all sizes because of its flexibility and affordability, and it is one of the best alternatives to group health insurance.

So if you’re considering an ICHRA benefits solution for your business (it is an excellent employee retention strategy by the way), it’s a good idea to consider the ICHRA pros and cons.

Pros and Cons of ICHRA

ICHRA allows employers to customize the health plan to meet their budget and company goals while providing employees with the necessary coverage. With ICHRA, employers reimburse employees for insurance premiums and qualified medical expenses.

Here's what to know about HRA account pros and cons.

Advantages of ICHRA Plans


One of the major benefits of ICHRA is the flexibility it offers employers. Employers can customize the plan to meet the needs of their business and their employees. The employer can choose the type of coverage they want to offer, the amount of the reimbursement, and the eligibility requirements.

This allows employers to tailor the plan to their specific needs, budget, and objectives. Additionally, employers can also choose to offer different levels of coverage to different classes of employees, such as full-time, part-time, or seasonal employees. This flexibility is the type of health coverage employers need to provide health benefits to the modern mixed workforce.

Cost Savings

Since employers decide on the maximum reimbursement allowances, they control how much is spent on health coverage. And any unused HRA account funds can roll over at the employer's discretion annually; otherwise, the funds stay with the employer. They also roll over month over month.

ICHRA Tax Advantages

ICHRA offers tax benefits to employers and employees – everyone loves a win-win! Employers can deduct reimbursements made to employees through ICHRA, reducing their overall tax liability. And reimbursements given to employees through ICHRA are not considered taxable income, so employees won’t have to pay taxes on reimbursements. This helps reduce healthcare costs for employers and employees and everyone benefits.

Attract and Retain Talent

ICHRA offers a more customized health plan than other employer-sponsored plans, making it more attractive to potential employees. The plan can provide employees with the coverage they need, helping employers retain top talent by ensuring employees have access to the health care they need. This can help employers save money in the long run by reducing turnover costs. Employers can demonstrate their commitment to their health and well-being by offering a health plan that gives employees the freedom to choose the individual health coverage that works best for them and then reimbursing them for expenses, including premiums.

ACA Compliance

ICHRA also helps employers comply with the Affordable Care Act (ACA). The plan meets the ACA’s minimum requirements for employer-sponsored health plans, allowing employers to avoid potential penalties. This can help employers save money in the long run by avoiding any fines or penalties associated with non-compliance.

Administration Simplicity

The plan can also help employers simplify their administrative processes. ICHRA does not require employers to manage a large group insurance plan, which can help reduce the administrative burden. This can help employers save time and money by streamlining their administrative processes.

Will ICHRA help you save on benefits? 

In about half the country, individual insurance rates are cheaper than their group plan equivalents, meaning health benefits dollars will stretch further with ICHRA. Use our heat map to see if your location is prime for saving.

Potential Disadvantages ICHRA Plans

ICHRA is relatively new.

Since ICHRA is a new benefit model, it will take time for employers and employees to get accustomed to the ins and outs of how an ICHRA health coverage plan works. Employers must educate themselves on ICHRA, decide if they will administer the plan in-house or outsource to an HRA administrator (recommended), then communicate to employees about the new health benefit.

Non-transferable Funds

ICHRA funds are not transportable, so they stay with the employer if the employee leaves the company. The good news is that the employee keeps their health insurance plan!

Limited Coverage

If individual insurance markets in your area are weak, your employees won't have as many options as they might like. Luckily, we continue to see the ACA health insurance marketplace grow and innovate with more great options for employees.


Ready to Get Started?

Begin designing your ICHRA plan today and be set up in minutes. You could start reimbursing your employees tax-free sooner than you think. 

Ready to get started?

Begin designing your ICHRA plan today and be set up in minutes. You could start reimbursing your employees tax-free sooner than you think.

What Is ICHRA?

ICHRA stands for Individual Coverage Health Reimbursement Arrangement. It’s an employer-sponsored health plan that allows employers to reimburse employees for certain health care expenses. Unlike other employer-sponsored one-size-fits-all health plans, ICHRA allows employers to customize the plan to fit their specific needs.

This includes offering different reimbursement levels, setting different eligibility criteria, and choosing which medical expenses to cover. The flexibility and cost savings that ICHRA offers make it an attractive option for employers looking for a more customized health plan.

For more all about ICHRA, check out our guide: all about Individual Coverage HRAs.

What Types of Businesses Use ICHRA?

ICHRAs work well for businesses of all sizes and primarily for those with a mixed workforce like full-time, part-time, seasonal, and remote workers. Industries that could be a good fit for ICHRA plans include restaurants, hospitality, retail, professional services, healthcare, landscaping, construction, and manufacturing.

ICHRA for Small Business

ICHRA is an ideal health plan option for small businesses. The plan offers flexibility, allowing businesses to customize the plan to fit their needs. This includes choosing which medical expenses to cover, setting different eligibility criteria, and offering different reimbursement levels.

This plan is beneficial for small businesses because it can help them save money on health insurance costs and attract and retain employees, competing with larger companies for talent. In addition, ICHRA is compliant with the Affordable Care Act (ACA), so small businesses can avoid any penalties for non-compliance. ICHRA is an attractive option for small businesses seeking a more customized health plan.

ICHRA for Large Businesses (ALEs)

ICHRA is a great choice for large companies (Applicable large employers) with more than 50 full time equivalent employees. Instead of taking on the risk and financial burden of a traditional group plan, ICHRA allows companies to control their health spend more efficiently and not be helpless with annual renewals or out of control self-funded plans.

How to set up an ICHRA Plan for employees

Now you’re ready to design and launch your ICHRA! Setting up an ICHRA is easy when you work with an ICHRA administration partner to walk you through these six basic steps:

Step 1: Pick a start date

If you’re used to open enrollment, picking a start date for your ICHRA will be a change, the good kind! With ICHRA, you can start any time of year, and the start date will trigger a special enrollment period so your employees can easily find plans on the individual market outside of the open enrollment dates.

Step 2: Design ICHRA classes for eligible employees

ICHRA provides business owners with powerful health coverage customization. Employers can divide employees into custom classes to determine what kind of benefit they receive (ICHRA to all employees, ICHRA to certain classes, no benefit to certain classes, or a traditional group benefit to certain classes). These classes include full-time, part-time, seasonal, salaried, non-salaried, employees working abroad, employees in a waiting period, employees working under a collective bargaining agreement, temporary employees in a staffing firm, employees in a specific geographic location, or a combination of any of those.

Step 3: Determine a budget and set allowances

The next step is to determine your limits for employee reimbursements for premium costs and medical expenses. You can set a different monthly allowance for varying classes that you choose to include and can even integrate this option with a traditional group plan. From there, you can further increase allowances based on age or the number of dependents. We weren’t kidding about the flexibility of ICHRA!

Step 4: Establish legal plan documents

The IRS and Department of Labor have a variety of rules to follow regarding HRAs. Your legal plan documents, which will include a formal plan document and the summary plan document, must include the ICHRA policies, including monthly reimbursement amounts, class structure, claims processes, reimbursement eligibility, and information on HIPAA and other procedures involving privacy. Failure to comply with the rules will result in penalties.

Step 5: Communicate your new benefit to employees

Tell your team about your new health benefit plan. You’ll want to include information like the start date, annual HRA allowance, and how to obtain coverage, including information regarding a special enrollment period and how premium tax credits interact with ICHRA. The Take Command team will help onboard your employees as part of our service.

Step 6: Provide resources for employees to purchase individual health insurance

Take Command is the only HRA administrator offering insurance plan shopping support on the individual market. This means we can provide your employees the best on- and off-market options based on their needs, budget, preferred doctors, and prescriptions.


HRA Administration pricing that’s simple.

No hidden fees. No contracts. No matter what.

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Per Employee
  • Onboarding, support and change management
  • Autopay employee premiums
  • Customizable HRA design and reporting