Introduction
Group health premiums keep climbing, and more Pennsylvania employers are asking their brokers the same question: should we look at an ICHRA instead?
It's a fair question, but it comes loaded with confusion. What does an ICHRA actually cost? Does a broker add value here, or just add another line item? Is this even the right move for a business your size?
This guide breaks down what a broker does in the ICHRA process, what costs look like, and how to tell if ICHRA fits your workforce. Franklin Benefits Group, a Bucks County brokerage with more than two decades advising local employers, brings that practical view to each step.
Key Takeaways
- ICHRA lets employees pick their own individual plan while you set a fixed, tax-free monthly allowance
- Your compensation is typically built into carrier commissions, not billed as a separate fee
- Adoption among applicable large employers jumped 34% from 2024 to 2025
- Any employer with at least one W-2 employee can offer ICHRA—no size cap
- Getting employee classes and affordability calculations wrong carries real compliance risk
What Is an ICHRA, Quickly Explained
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is an employer-funded allowance employees use to buy their own individual health insurance.
The Centers for Medicare & Medicaid Services defines it as an alternative to traditional group coverage that reimburses premiums, copays, and deductibles once qualifying individual coverage is in place. Reimbursements are tax-free for both employer and employee.
The core difference from a group plan is choice. Instead of picking one plan for the whole company, employees shop the individual market and select coverage that fits their own doctors, prescriptions, or budget.
Structural basics:
- Allowances can vary by employee class (full-time, part-time, seasonal, location, and other permitted categories)
- No federal minimum or maximum contribution requirement
- Open to employers of any size
That last point matters. QSEHRA, a related HRA option, caps out at fewer than 50 employees. ICHRA has no such ceiling, which is why it's landing on the radar of businesses that outgrew QSEHRA but still want more budget control than a traditional group plan offers.
Why a Broker's Role Matters More, Not Less, With ICHRA
Here's the part that surprises a lot of employers: ICHRA doesn't simplify benefits decisions. It multiplies them.
A group plan is one decision. ICHRA is dozens of smaller decisions, one for each employee class, and each carries its own compliance considerations. Brokers take on a different kind of work here, and often more of it.
Where Brokers Prevent Costly Mistakes
Brokers help employers avoid the pitfalls that don't show up until an audit or an unhappy employee call:
- ACA affordability calculations - required employee contributions generally can't exceed 9.02% of household income (2025), tested against the lowest-cost silver plan available locally
- Employee class design - you generally can't offer group coverage and ICHRA to the same class, and classes have to follow permitted categories, not invented ones
- Contribution consistency - amounts within a class must follow the same terms, with limited variation allowed by age or family size
Comparing ICHRA to the Alternatives
A broker's job is to determine whether ICHRA, QSEHRA, level-funded, or traditional group coverage actually fits your workforce and budget. That comparison requires looking at claims history, employee locations, hiring plans, and cash-flow tolerance, not just a premium quote.
The Advocate Who Sticks Around
Once enrollment ends, a self-service platform can't answer an employee's claim question or walk your HR team through a renewal strategy. A broker can.
That ongoing support matters more as adoption grows. ICHRA adoption among applicable large employers grew 34% from 2024 to 2025, with some large-employer groups seeing growth as high as 49%, according to the HRA Council's 2025 report. As more employers adopt ICHRA, the need for someone who understands its moving parts only grows.
Firms like Franklin Benefits Group pair that strategic guidance with direct relationships across dozens of carriers, giving employers negotiating leverage they wouldn't get shopping alone.
What a Broker Actually Does Throughout the ICHRA Process
ICHRA implementation isn't a single meeting. It's a sequence, and skipping steps is usually where employers get into trouble.
- Gather census data and budget targets. Your broker collects employee ages, ZIP codes, dependent status, and current plan information to understand what your workforce actually needs and what you can realistically fund.
- Build a tailored contribution strategy. Working with carriers or administrators, your broker structures allowances across your permitted employee classes, testing affordability along the way.
- Present the proposal to leadership. Your broker translates technical plan details into a straightforward cost-versus-benefit picture: what you'll spend, what employees gain, and what changes operationally.
- Coordinate implementation. Your broker handles account setup, employee onboarding, and education sessions so staff understand how to shop for and use their new allowance.
- Provide ongoing support after go-live. Your broker stays on for renewal strategy, compliance monitoring, and claims or enrollment support after the plan goes live.
That last step is where a lot of DIY approaches fall apart. Someone has to keep verifying that employees maintain qualifying coverage, track notice deadlines, and reconcile classification changes when a part-timer moves to full-time. A broker builds that into an ongoing relationship rather than treating it as a one-time transaction.
How Much Does an ICHRA Cost, and Is a Broker Cheaper or More Expensive?
Let's separate two different costs here: the allowance you fund for employees, and whatever you pay for broker or administrative support.
What Drives the Allowance Amount
There's no regulatory minimum or maximum. Your allowance is driven by budget, region, and employee class.
A 2024 industry report from PeopleKeep and Remodel Health found average monthly allowances of $448 per employee among applicable large employers and $600 among smaller employers. Those figures come from platform customer data, not a mandated range—set your number from your own workforce and budget, not a benchmark alone.
How Brokers Get Paid
Here's the part that trips up most employers: broker compensation is typically built into carrier or administrator commissions, not billed separately. That means working with a broker on your ICHRA transition usually costs you nothing extra out of pocket.
So is it cheaper to self-navigate ICHRA? Rarely, once you account for the hidden costs:
- Compliance mistakes that trigger penalties or rework
- Missed carrier discounts you'd never see without broker relationships
- Employee confusion that eats HR hours all year long
Administration Fees Are a Separate Line Item
Some ICHRA administration platforms charge a per-employee-per-month (PEPM) fee for enrollment tracking, coverage substantiation, and reimbursement processing. A broker helps you evaluate whether that fee is worth it. A cheaper platform that leaves your HR team manually chasing documentation isn't actually saving you money.
Ask About Tax Incentives
Some states offer ICHRA tax credits for small employers. Indiana, for example, offers up to $400 per covered employee in year one for employers under 50 employees. Pennsylvania doesn't currently list an ICHRA-specific credit. Ask your broker whether any state or local incentive applies to your business.
Is ICHRA the Right Choice for Your Business?
Offering an ICHRA is optional. You can adopt it alongside a group plan for some employee classes while keeping traditional coverage for others.
Signals that ICHRA might be a strong fit:
- Group premiums have climbed unpredictably at recent renewals
- Your workforce spans full-time, part-time, and multi-location employees with varied needs
- You've struggled to find one plan that satisfies everyone
- You want a fixed, defined monthly benefits budget instead of absorbing carrier increases
- You're hiring and need a scalable benefits structure that doesn't get more complicated as headcount grows
Even with those signals, get a broker consultation before you decide. Eligibility rules, affordability calculations, and employee class design carry real compliance risk if handled incorrectly. A five-minute miscalculation on affordability can become a much bigger problem at tax time.
Choosing the Right Broker for Your ICHRA Transition
Not every broker is equally equipped to guide an ICHRA transition. Here's what to actually look for:
- Carrier relationships across the individual market, not just group plans
- Hands-on compliance knowledge, including affordability testing and employee class rules
- A track record with ICHRA specifically, not just general benefits brokerage
- Ongoing support after enrollment, since ICHRA questions don't stop once open enrollment ends
Ongoing support is where many transitions stall. Employees will keep asking about substantiating coverage, reimbursement delays, and mid-year classification changes long after launch. A broker who disappears after the sale leaves you handling that alone.
If you need that level of follow-through, Franklin Benefits Group's Broker of Record process starts with a simple letter naming the firm as your broker. It triggers an in-depth market analysis at no additional cost and does not disrupt your current coverage.
From there, FBG's HR Support Center—including ACA reporting tools, a compliance notice builder, and a health plan compliance calendar—supports Bucks and Montgomery County employers after enrollment, not only during it.
Frequently Asked Questions
How much does an ICHRA cost?
Cost depends on the monthly allowance you set per employee class, which industry data puts at about $448 to $600 on average, plus any administration platform fees. See the cost section above for a fuller breakdown.
Is it cheaper to get health insurance through a broker?
Broker compensation is typically built into commissions rather than charged as a separate fee. Working with a broker usually costs employers nothing extra and still adds compliance support and carrier negotiating power.
Is ICHRA optional for employers?
Yes. ICHRA remains a fully optional benefit structure. Employers can choose to offer it instead of, or alongside, traditional group coverage for eligible employee classes.
Do brokers get paid extra for selling ICHRA plans?
Compensation structures vary by carrier and administrator, and industry-wide models for ICHRA-specific commissions are still evolving. Most brokers are paid through standard commission arrangements rather than a separate ICHRA fee.
Can a broker help switch my company from group coverage to ICHRA mid-year?
Mid-year transitions are possible but require careful timing, notice requirements, and compliance review. Broker guidance helps you hit notice deadlines and avoid costly compliance missteps.
What size business can offer an ICHRA?
Any employer with at least one W-2 employee can offer an ICHRA. Unlike QSEHRA, which is limited to fewer than 50 employees, ICHRA has no size limit.
