Cutting Through the Noise: Turning ICHRA Complexity into Opportunity

What health plans need to know about ICHRA:

• ICHRA adoption is accelerating across both small and large employers, driven by rising group premiums and demand for flexible health benefits.

• The ICHRA ecosystem is fragmented, with dozens of BenTechs, TPAs, and FinTechs — health plans must build scalable integration strategies to stay competitive.

• The proposed CHOICE Act (OBBA) could codify ICHRA into law, introduce new federal tax credits, and expand On-Exchange eligibility for employees.

• Health plans shouldn’t wait for perfect clarity — early investment in infrastructure, data coordination, and member experience is key to capturing ICHRA market share.

There’s a lot of buzz around Individual Coverage Health Reimbursement Arrangements (ICHRA) — and even more confusion. With shifting regulations, new players entering the market weekly, and the looming potential of federal legislation, it’s no surprise that health plans are asking, “Where do we even start?”

To help make sense of the chaos, we hosted a Fierce Healthcare webinar, Making ICHRA Work: Cutting Through the Noise, featuring Softheon’s Kevin Deutsch and Oliver Wyman's Terry Burke. Together, they broke down the current ICHRA landscape and offered practical guidance for health plans looking to cut through the noise and capitalize on the opportunity.

Wait, What Is ICHRA/CHOICE Again?

Let’s start with the basics. ICHRA is a health benefit that lets employers reimburse employees for individual health insurance and qualified expenses using pretax dollars — essentially flipping the script from a group-based plan to a defined contribution model, similar to a 401(k).

Why is ICHRA so attractive to businesses right now? The newest report from the HRA Council has some exciting statistics.

• Adoption is accelerating across employer sizes. Among Applicable Large Employers (ALEs), ICHRA adoption is up 34%, with some cohorts seeing 49% year-over-year growth from 2024 to 2025. Small employers are moving too — ICHRA adoption among non-ALEs is up 52%.

• It’s bringing coverage to new groups. In 2025, 83% of employers offering ICHRA or QSEHRA had not previously offered any coverage.

• Employees are covering more dependents. The dependent coverage ratio has grown to 0.67, suggesting that the flexibility and plan choice of ACA-compliant coverage resonates with families.

Bottom line: ICHRA isn’t just a policy experiment — it’s a fast-moving market that could transform employer-sponsored coverage.

What’s Fueling the Alternative to Traditional-Group Coverage?

• Enrollment is growing fast: Between 500K and 1M employees are already enrolled — and the market is expanding at ~60% year-over-year.

• VC money is flowing: More than $700M has poured into ICHRA-focused startups since 2020.

The One Big Beautiful Bill Act (OBBA) could be a turning point for ICHRA. If passed, this legislation will likely accelerate adoption and bring new momentum to the Individual market. Currently, ICHRA exists under Executive Order 13813. OBBA would codify those regulations into law — providing long-term clarity and making it easier for plans to invest in infrastructure, partnerships, and dedicated teams.

It would also rebrand ICHRA as Custom Health Option and Individual Care Expense (CHOICE) arrangements. Under this new model, employers would receive federal tax credits in addition to any state incentives, and employees could use funds for On-Exchange plans — something not permitted today. You can dive deeper in Terry’s CHOICE writeup.

How Health Plans Can Cut Through the Noise

ICHRAs are messy: Fragmented vendors. Complicated workflows. Nonstandard data. To help health plans focus, Kevin and Terry offered a five-part ICHRA framework — NOISE: Needs, Opportunities, Improvements, Strengths, Engagement.

Needs: Dedicated Strategy and People

ICHRA requires more than curiosity. It demands strategic alignment and dedicated ownership. Health plans need new roles focused solely on ICHRA — not tacked onto existing teams. This means investing in partnerships, member experience design, and infrastructure to support individual plan selection at scale.

“If you don’t get on the boat now, you might not get another opportunity.” – Kevin Deutsch

Opportunities: It’s Bigger Than You Think

ICHRA presents a real opportunity for growth, if health plans are willing to act. The original belief was that ICHRA would serve mostly small and gig economy employers, but interest is now expanding into the large group market. Nearly half of large employers are actively considering these arrangements.

That momentum comes with complexity. The ICHRA market is crowded. On one side, there are dozens of Benefit Technology (BenTech), Financial Technology (FinTech), and third-party administrator (TPA) companies, with new players entering the game constantly. Health plans are still figuring out how to engage with these entities — and how to scale.

The opportunity lies in bringing structure to the chaos. You must reconfigure existing Off-Exchange processes to support a new kind of distribution model, which means:

• Integrating with new partners across the ICHRA ecosystem.

• Creating flexible pathways for employer and broker engagement.

• Managing enrollment data from nontraditional sources.

• Supporting employee-level payments at scale.

Health plans that build the right infrastructure can capture the ICHRA-funded market.

Improvements: Fix the Friction

ICHRA is still a fragmented ecosystem: Enrollment files that don’t follow 834 formats. Monthly premium payments from multiple sources. No clear way to identify ICHRA members.

The key to improvement? Infrastructure. Plans must coordinate with ICHRA admins, brokers, and partners to ensure consistent data exchange, reliable member identification, and seamless workflows. Only then can you move from early experimentation to operational excellence.

Strengths: You Don’t Have to Start from Scratch

If you already serve the ACA market, you’re halfway there. The right partner — an ICHRA integrator like Softheon — helps you turn existing capabilities into a unified, scalable ICHRA strategy.

Without an integrator, you are stuck with a tangle of one-off connections to every new admin or partner. That’s expensive, unsustainable, and nearly impossible to manage at scale. Softheon simplifies the stack by becoming your single connection point to the fragmented ICHRA ecosystem — streamlining enrollment, payments, compliance, and reporting.

Payers need a partner with deep industry expertise, regulatory fluency, and a proven track record. The ideal solution values broker relationships, supports real-time collaboration, and is committed to innovation. These connections will turn internal capabilities into scalable solutions.

“This isn’t group coverage. It’s Individual. You need the infrastructure and experience to support members as individuals.” – Terry Burke

Engagement: Build One Member Experience

ICHRA introduces new platforms, new billing processes, and new expectations. Employees don’t care if coverage is “individual” — they want a seamless, dependable experience that feels like traditional group insurance.

Health plans must take ownership of the end-to-end journey. That means working across the value chain, from onboarding to billing to renewals, and delivering consistency regardless of the payment source. For a full breakdown, check out our ICHRA Implementation Checklist for health plans.

The role of the ICHRA integrator is to bring those components together, so members feel one unified experience. When done right, health plans build trust and retention, and ensure that ICHRA functions as a viable, scalable benefit solution.

Are You Ready to Compete in the ICHRA Market?

Ready to improve your ACA strategy or thinking of getting started with ICHRA? Connect with our team of Individual market experts. If you’re a broker or benefits partner looking to grow your health plan network, reach out to our sister company W3LL.

And don’t forget to catch the full recording of the Fierce Healthcare Webinar on our YouTube Channel. Have an ICHRAtastic day!

Content originally published at Softheon.com.