Employers and brokers
ICHRA vs group medical
Employer allowance plus individual coverage, or a sponsored group plan — when each fit is ordinary.
An ICHRA and a group medical plan both help employees get health coverage. They work differently. This page is for employers and brokers. It does not sell ICHRA or rank platforms.
What an ICHRA is
ICHRA means Individual Coverage Health Reimbursement Arrangement. The employer sets an allowance. The employee buys individual medical coverage — on the Marketplace or off it — that is a qualified individual policy. The employer then reimburses premiums and, if the plan allows, other qualified medical expenses, up to that allowance.
The employee, not the employer, is the policyholder on the individual plan. Different employees can end up in different carriers and networks. That is useful when people live in many ZIP codes.
The IRS treats an ICHRA as an employer health arrangement. If the employer is an applicable large employer, the ICHRA can be the offer of coverage used to test affordability. If the ICHRA is affordable and the employee accepts it, that employee is generally not allowed a premium tax credit on Marketplace coverage. If the ICHRA is unaffordable and the employee opts out, a premium tax credit may still be available. See the IRS premium tax credit Q&A in the sources.
What a group medical plan is
A group medical plan is coverage the employer sponsors. The employer (or its broker) picks one plan or a short menu of group plans. Employees enroll in that group policy. Networks, deductibles, and formularies are the same set of options for everyone in the group, aside from the tiers the employer decided to offer.
Small-group paper is filed by state and rated on the census and where the group is based. The common idea is the same: the employer is offering a group plan, not an allowance to buy individual coverage.
For a shorter employer explainer, see How small-group health insurance works.
How they differ
Who picks the plan. Group: the employer picks the plan menu. ICHRA: each employee picks an individual policy that works in their area.
Whose name is on the policy. Group: the employer’s group policy. ICHRA: the employee’s individual policy.
What the employer spends. Group: a share of group premiums, which move with census, plan design, and the local filed market. ICHRA: a stated allowance per class of employee, plus administration.
Participation. Group carriers often require a minimum share of eligible employees to enroll. An ICHRA does not use a group-participation test in the same way, because there is no single group policy to underwrite.
Networks. A group plan uses the network attached to that product. An ICHRA follows whatever individual plans employees can buy where they live. That helps a scattered workforce. It can frustrate an employer that wants one network and one set of ID cards.
When each fit is ordinary
A group plan often fits when most people work in one area, you want one network and one carrier relationship, and you can meet participation and contribution rules. Cost is less predictable year to year than a fixed allowance, but the employee experience is familiar.
An ICHRA often fits when employees live in many states or rating areas, a conventional group plan is hard to place, or the employer wants a fixed allowance and is ready to let people buy individual coverage.
Neither option is “better” in the abstract. Brokers compare both when the facts support it.
Affordability for 2026
For plan years beginning in 2026, the IRS required contribution percentage is 9.96% (Rev. Proc. 2025-25). That is the figure used to decide whether employer-sponsored coverage — including an ICHRA — is affordable for premium-tax-credit purposes. Applicable large employers also use this percentage when they test an offer under the employer shared-responsibility rules.
For an ICHRA, the usual test looks at the lowest-cost silver individual plan in the employee’s rating area, subtracts the employer’s monthly allowance, and asks whether the leftover employee cost is at or under that percentage of the chosen safe-harbor wage or income figure. This page does not calculate a dollar allowance.
Platforms already in this directory
These ICHRA platforms already have pages on Innov8 Tools. They are listings, not recommendations:
Read each page for research notes and sources. Coverage depth varies.
Independent note
Innov8 Tools is a free directory published by Innov8 Healthcare. It is not a ranking and not a paid placement list. Employers who want coverage can ask Innov8 to introduce a broker. Brokers can use the directory to compare products from a consistent fact set. This guide does not sell ICHRA and does not collect a census.