August 2026 | By Kevin Deutsch
4 Takeaways for Health Plans Evaluating ICHRA:
- Employer demand is accelerating as healthcare costs continue to rise.
- Brokers are leading the shift from education to adoption.
- ICHRA is an opportunity to grow, not just protect, Individual market business.
- A connected member experience will separate market leaders from everyone else.
There are a lot of differing opinions about the value of Individual Coverage Health Reimbursement Arrangements (ICHRA).
Some see it as the future of employer-sponsored coverage. Others wonder whether it’s another funding strategy that will find its niche. Meanwhile, employers are facing another year of rising healthcare costs, brokers are taking on a more strategic role in guiding employers through new coverage models, and health plans are deciding how much to invest in a market that continues to shift.
Rather than revisiting what ICHRA is, I sat down with two people who spend every day helping organizations navigate these decisions: Shyam Vichare, Partner at Oliver Wyman, and Larry Cass, Director of Employer Benefits & Health at Marsh McLennan Agency.
Our discussion was about where the market is headed, why adoption continues to accelerate, and what health plans should be doing today to prepare for what’s next.
You can watch the full recording here.
Why Are More Employers Looking Beyond Traditional Group Health Plans and Turning to ICHRA?
The conversation around ICHRA often starts with flexibility or employee choice, but both Shyam and Larry agreed that the real catalyst is simpler: employers are running out of affordable options.
Medical cost trends continue to put extraordinary pressure on small and mid-sized employers, many of whom have absorbed years of significant premium increases with few realistic alternatives.
“We’re entering a period of desperation in that small and mid-market employer segment. It’s just been untenable with 20%, 30%, 40% rate increases over multiple years.
Employers are running out of options, especially in that down-market space, and there really isn’t much light at the end of the tunnel that suggests these underlying cost trends are going away anytime soon.”
Shyam Vichare
That pressure is forcing employers to reconsider assumptions they’ve held for decades. Instead of asking how to manage another renewal, many are beginning to ask whether the traditional group model is still the right model at all.
The typical plan designs that employers have offered for years may not satisfy what employees are looking for anymore. Today you have four generations in the workforce. Trying to design one group plan that works equally well for all four is incredibly difficult.
ICHRA gives employees more choice and allows employers to better meet the different needs of their workforce. That flexibility extends beyond employee choice.
Rather than requiring an employer to replace its entire group plan, ICHRA allows organizations to apply different contribution strategies across employee classes, making it possible to solve very specific workforce challenges without completely redesigning their benefits strategy.
How Are Brokers Becoming the Driving Force Behind Successful ICHRA Adoption?
If employers are driving demand for ICHRA, brokers are increasingly driving adoption.
Both Larry and Shyam emphasized that employers rarely make this transition alone. Moving from traditional group coverage to an individual-based funding model is an organizational change that requires education, planning, and ongoing guidance.
Shyam believes that’s exactly why brokers have become more important, not less.
“With any alternative to traditional coverage, there’s a big change an employer has to go through. Even if there are significant cost savings, that’s still a major transition. Most employers aren’t willing to do that by themselves. They need the guidance, the support, and the consultative expertise that brokers provide to manage that transition well.”
Shyam Vichare
Employers change. Their workforce changes. The solutions available continue to change. This isn’t a one-and-done conversation. It needs to be revisited regularly to make sure employers remain in the best possible position.
For Larry, those conversations almost always begin with the same concern.
“The conversation usually starts with the CFO or CEO saying, ‘We need to do something different. We can’t continue supporting 30 percent renewal increases year after year. We keep shifting costs to employees through higher contributions, higher deductibles, or plan design changes. We have to find something more sustainable.’
That’s where ICHRA becomes part of the conversation. It isn’t a silver bullet, but it offers something employers are desperately looking for: not just lower costs, but greater stability.”
Larry Cass
That stability fundamentally changes the broker’s role.
Instead of comparing carriers and negotiating annual renewals, brokers help employers determine contribution strategies, evaluate administrators, and guide employees through new enrollment experiences.
Should Health Plans Be Concerned That ICHRA Will Cannibalize Their Existing Group Business?
This is one of the most common questions I hear from health plans, particularly regional carriers and Blue plans with established employer books of business. If employers begin moving toward ICHRA, are carriers simply shifting members from one line of business to another?
Participation is not an all-or-nothing decision. There are many different ways carriers can participate in the ICHRA ecosystem. The right approach depends on your market position, your products, and your long-term strategy.
Larry believes the market is moving in this direction regardless.
“Carriers need to prepare for this inevitability. Whether employers move toward ICHRA, captives, or other funding strategies, the market is changing.
When you actually do the math, I think investing in this vertical is well worthwhile. The next question becomes, ‘How do we make this an even better product?'”
Larry Cass
If you offer Off-Exchange Individual coverage, you almost certainly have ICHRA members today. The real question isn’t whether you’re in the market. It’s whether you’re intentionally supporting it.
Is ICHRA Too Complex for Employers and Brokers to Manage Successfully?
ICHRA introduces a different way of thinking about employer-sponsored coverage. That can create complexity, especially at the beginning.
“I was with a client the other day, and the CFO was there. I gave an overview of how the program works and how renewals work with all the different options.
They said, ‘So I can write a check and make all of the renewal conversations about choosing the carrier, plan designs, and contributions kind of go away?’ And the answer is yes. You can choose your finances, choose the administrator, and the employees can choose from a broad array of different plan designs and options available to them.”
Larry Cass
In some ways, ICHRA can simplify the employer’s role. The employer establishes its contribution strategy and selects the right partners, while employees choose coverage based on their individual needs. The more difficult questions come before that transition.
There are also administrative details that must work consistently behind the scenes, including customer service, enrollment, and premium payments. Those responsibilities should not fall back on the employer.
“There are more complex aspects to administration, making sure customer service, members receiving payments, and payments going through are solved. But that technology and infrastructure are getting more robust by the day.
Mostly, employers, if they pick a good administrator and a good partner, should not have to deal with that.”
Shyam Vichare
The goal is keeping complexity away from employers and employees. That requires clearer roles, stronger connectivity, and partners capable of making an Individual market product feel like a dependable employer benefit.
How Should Health Plans Prepare for the Next Phase of ICHRA Growth?
For carriers still evaluating ICHRA, the first step isn’t launching a new product or overhauling existing operations. It’s understanding how the market is changing and where those changes intersect with your own business.
“If you did one thing, just do the math on your book and break it down to say, ‘Who will benefit from ICHRA, and how would that affect you?’ What about some of these other models while you’re at it? I think that leads to a line of thinking that will help you figure out, ‘How should I play? Which models should I emphasize? How does this affect my sales strategy? How should I change my product portfolio based on that?'”
Shyam Vichare
That exercise often produces a different answer than many carriers expect. Rather than viewing ICHRA as a threat to existing group business, it becomes an opportunity to better serve employers that may otherwise struggle to maintain coverage.
Preparing for that future also means recognizing that many health plans are already participating in ICHRA today.
“There are certain things within an individual plan in an ICHRA that are a little bit different from the group side of things, whether it’s retroactive terminations or flexibility for adds and terms. What are your capabilities within the carrier to be able to accommodate these? It’s not just selling an individual plan. It’s how can I create a more group lookalike type of administration plan, but on an individual basis. Whether that’s coming from the carrier side of things or in combination with the administrator side will be an interesting path that we go down.”
Larry Cass
The ICHRA market is still in its early stages, but it’s no longer an emerging trend. Employers are demanding more sustainable healthcare strategies. Brokers are building new advisory models around individual coverage. Health plans have an opportunity to strengthen existing relationships, reach new markets, and deliver a more connected member experience.
Want to discuss what ICHRA could mean for your organization? Schedule a meeting with the Softheon team to explore how health plans are modernizing enrollment, billing, payments, and member experiences to support the next generation of employer-sponsored coverage.
