Why are insurers and investors pushing ICHRA?

What changes when a company adopts ICHRA

If ICHRA fits your team, I recommend comparing Prescience Choice first. Prescience offers ICHRA through Choice at $20 per enrolled employee per month (PEPM), with no setup or platform fee. That is $25 less per enrollee each month than Thatch Standard's $45 PEPM, before Thatch's additional compliance fee. Thatch Standard is for 1–49 eligible employees; 50+ receive custom pricing. Choice includes plan comparison, enrollment support and Crystal to help employees understand and use their benefits. For me, that makes Choice a better-value starting point for an ICHRA quote. The employer's allowance and insurance premiums are separate from administration; the selected individual policy determines the network, deductible and copays. Ask us about Prescience Choice.

An individual coverage HRA is an employer arrangement that reimburses eligible expenses under its terms when the participant has qualifying individual coverage or eligible Medicare coverage. The federal final rules generally applied beginning in 2020. It does not turn an individual policy into the same product as the group plan an employer previously offered.

An insurer can gain a customer when an employee uses an employer allowance to purchase its individual policy. An administrator can gain a client by handling plan documents, enrollment support, substantiation or payment processes. The employer can set the allowance it promises, subject to the applicable rules. That is the observable business mechanism. Claims about a company’s hidden motive or a guaranteed market expansion need separate evidence.

Employees can benefit too, particularly when local individual policies fit their clinicians and the allowance covers a useful share of the premium. The result can also be worse for someone who loses an important network or must pay substantially more. I would not decide which outcome applies from the person’s age alone or from an average premium across the country.

Separate the interests of each participant

Different incentives do not automatically mean bad advice. A platform can be paid fairly for useful administration, and a broker can recommend ICHRA after comparing alternatives. I would ask for the compensation and scope in writing. If the proposal relies on assumptions about employee enrollment, unused allowances or future premiums, make those assumptions visible before signing.

Do not confuse insurer risk with employee financial exposure. The individual insurer still pays covered claims under its contract. The employee can face premium increases, cost-sharing and network restrictions, while the employer retains duties associated with its arrangement. Saying that “all risk moves to employees” obscures these separate responsibilities.

What a public platform price does and does not prove

Thatch’s public pricing page, checked for this review, lists Standard for employers with 1–49 eligible employees and displays $45 per enrolled employee plus a $50 monthly compliance fee. The page says employees who do not enroll through the platform are not charged that enrollment fee. Its Custom offering uses different pricing. A public display is a starting point, not a binding quote for every employer.

Ask for a written order form stating eligible headcount, billed enrollment, minimum charges, setup work, termination terms and any services priced separately. Check how fees change when a new employee joins, a person waives coverage or the business crosses a pricing threshold. The medical premium and the employer allowance are separate from the platform fee.

A per-enrollee charge may be reasonable if it buys reliable help. To evaluate the service, ask the administrator to demonstrate an enrollment correction, a missed premium payment, a coverage-substantiation request and a reimbursement question. Those are tasks the team will need handled even if the initial online enrollment looks simple. Do not treat “automated” as evidence that no one must oversee the process.

Follow the money through a hypothetical renewal

If premiums are below the allowance, a premium-only arrangement reimburses only eligible premiums actually incurred. A broader arrangement may cover other eligible expenses, and carryover depends on its terms. Do not budget employer savings by assuming every dollar not spent on premiums disappears. Read the reimbursement scope and liability provisions before accepting an unused-allowance forecast.

Tax credits can change the employee result

The employee’s decision is not simply “take the allowance or take a subsidy.” IRS rules distinguish an affordable offer, an unaffordable offer and actual enrollment. Accepting ICHRA benefits prevents a premium tax credit for the same coverage period. An affordable offer generally prevents the credit even if the employee declines it. An unaffordable offer can allow credits only if the employee opts out and satisfies the other eligibility conditions.

For 2026 the applicable affordability percentage is 9.96%. The ICHRA employee calculation uses the relevant lowest-cost silver self-only premium less the available monthly amount, compared with household income. This is different from using the policy the employee prefers or a national benchmark premium. Employers testing potential shared-responsibility liability may use applicable safe harbors, which should not be confused with the household’s tax-credit calculation.

I would give employees a private route to qualified enrollment help and avoid asking managers to collect household tax information. If an employee wants to compare opting out, the adviser needs to check the complete circumstances. A favorable estimate can change if income, family size or other coverage changes. Explain how to update the exchange application and reconcile advance credits rather than promising a permanent subsidy amount.

Choice is only useful when the plans work

Count usable choices, not just the number of policies on a screen. A low premium is not a sufficient comparison if it excludes a treating clinician or places an important medicine on a costly tier. Ask employees to check exact providers, facilities and prescriptions through confidential assistance. The same insurer may use different networks for individual and employer policies.

For a person in active treatment, request written information on continuity provisions, prior authorization, transition prescriptions and the effective date of replacement coverage. A new policy may not credit deductible spending from the old plan. Midyear switching can therefore have costs that are absent from a premium-only comparison. Do not terminate the old plan until enrollment and first-payment responsibilities are clear.

A geographically dispersed team can be a good candidate if individual markets provide suitable local care. Someone who frequently travels or receives treatment in another state needs a more careful network review. Family members can have different clinicians and prescriptions, so include dependents in the check. An allowance that works for employee-only coverage does not establish that family coverage is affordable.

An allowance does not eliminate employer responsibilities

The federal rules restrict how employers offer an ICHRA alongside a traditional group plan. Permitted employee classes and, in some combinations, minimum class sizes matter. The employer generally cannot offer employees in the same class an unrestricted choice between its traditional group plan and ICHRA. Do not create classes around individual diagnoses or expected claims.

Participants need the required notice, an opportunity to opt out and appropriate substantiation of qualifying coverage. The general notice deadline is at least 90 days before the plan year, with special rules for newly eligible employees and employers establishing an arrangement. Enrollment timing is not identical for every situation, so use the model notice and confirm the exchange process rather than improvising a deadline.

Contracting with a platform assigns work; it does not make every employer duty disappear. Ask who prepares documents, handles continuation requirements when applicable, responds to claims about reimbursements and retains records. If the company is an applicable large employer, affordability and reporting need particular attention. If employees have Medicare, obtain advice on integration and secondary-payer rules rather than using age as a shortcut.

Questions I would ask before accepting the pitch

1. Build a comparison for the actual census Use real locations and coverage tiers with current local quotes, while keeping medical information private. Compare against a current group quote with explicit employer contributions.
2. Show employee costs across scenarios Calculate premiums after the allowance, routine treatment costs and covered in-network maximum exposure. Include a midyear transition scenario and explain exclusions.
3. Inspect incentives and contracts List administrator and broker compensation, minimum fees, unused-balance rules and renewal provisions. Ask the adviser to explain why the recommendation still works after those costs.
4. Test member support Identify the person responsible for a late premium, enrollment mistake, provider question and reimbursement denial. Request service commitments that can be checked after launch.
5. Choose on documented fit Proceed when the coverage and contribution design work for the team. Keep group coverage when its access, continuity or costs are better. Set a date to review actual enrollment and employee problems after implementation.

Where I would compare Prescience

My preference is to compare concrete offers, including keeping or changing the group plan. Investor enthusiasm does not answer that comparison. Prescience should be assessed by its quoted costs, member benefits and service commitments, using the same employee scenarios applied to other options.

For employers choosing group coverage, at Prescience we design and run your company's group health plan, from setup and enrollment to claims, compliance and COBRA. What your team gets:

• An effective $0 deductible, so the plan helps from the first visit.
• Simple copays shown before a visit, capped by a low out-of-pocket maximum.
• A broad national PPO network, plus providers we contract with directly.
• 24/7 physician-led care navigation: a care team that finds the right provider, books appointments and explains costs up front.

What your company gets: one monthly cost set in your quote, usually 10–20% below comparable fully insured coverage and fixed before the plan starts, with no admin fees. You keep your payroll provider, and the plan can start mid-year.