Let’s be honest—health benefits are complicated. If you’ve spent any time researching alternatives to traditional group health insurance, whether for your business or your clients, you’ve probably come across an ICHRA plan. If the Individual Coverage Health Reimbursement Arrangement (ICHRA) sounds confusing, you’re not alone.
A lot of employers, and even some brokers, hesitate when they first hear about ICHRA. Maybe it feels like too much change or too much work. But here’s the twist. The very reasons people avoid adding an ICHRA plan are often due to misunderstandings, or better yet, missed opportunities.
Let’s walk through five of the top reasons people say “no thanks” to an ICHRA plan, and why it might be worth a second look.
1. “I don’t want to deal with compliance headaches.”
Translation: I don’t want the IRS knocking on my door.
ICHRAs fall under a mix of IRS, ERISA, and ACA rules. That alone can make employers or advisors nervous.
Here’s the real story:
Yes, ICHRA plans are regulated, and that’s a good thing. When done right, they’re fully compliant and protect both the employer and the employee. The key is working with a benefits administrator who handles ICHRA plan documents, substantiation, reporting, and notices. Instead of managing a group policy and annual renewals, you offload the heavy lifting to experts and empower employees with choice.
Bonus: No minimum participation, no group underwriting, and no big renewal surprises.
2. “My employees won’t like shopping for their own insurance.”
Translation: I don’t want my people to feel abandoned.
This is a common concern, especially for employers used to offering one-size-fits-all group plans. And brokers may worry it will feel like too much change for their clients.
But here’s the opportunity:
When paired with personal guidance and tools (yes, Flyte offers those), ICHRAs can actually enhance the employee experience. People get to choose the coverage that works for their doctors, their families, and their budgets, instead of a one-size-fits-all plan. If you don’t have a broker, Flyte can connect employees with trusted partners for enrollment support.
With the right help, employees don’t just “figure it out.” They feel empowered.
3. “This sounds like more work for me.”
Translation: I’m already wearing too many hats.
Switching from the default group plan model to something new can feel like a lot of work upfront.
But in reality:
ICHRAs can simplify your benefits process, especially long term. You set a monthly allowance. We handle reimbursements, compliance, and employee support. There’s no chasing down renewals, managing plan changes, or dealing with participation requirements. And you can scale it across remote workers, different states, or multiple business units.
It’s simple, scalable, and sustainable, even for growing companies or multi-location clients.
4. “It won’t help me attract or retain talent.”
Translation: I need a competitive benefits package.
There’s a misconception that ICHRAs are only for budget-conscious or small employers.
But in today’s market:
Flexibility is a huge perk. Many candidates now expect personalized, portable benefits, especially younger talent or remote workers. An ICHRA plan let you offer tax-free dollars toward a wide range of plans, including vision, dental, and even Medicare premiums. Want to sweeten the deal? Add a Cafeteria Plan to let employees use pretax dollars for out-of-pocket costs.
The right plan design can match or exceed the value of traditional group coverage.
5. “I just don’t trust something this new.”
Translation: If it isn’t broken, don’t fix it.
ICHRA is still new to a lot of folks, and with anything new comes a little skepticism.
But here’s the kicker:
ICHRA has been around for more than five years and is backed by the IRS, DOL, and HHS. It was designed to increase competition and give employers more choice. And it’s not just for startups. Many larger employers are using it to reduce costs, offer better choice, and simplify multi-state coverage. This isn’t a loophole. It’s a legitimate, growing model for modern benefits.
ICHRA isn’t a trend. It’s a strategic shift, and the data backs it up.
If ICHRA Isn’t the Right Fit…You’ve Still Got Options
Not every company or client is ready for ICHRA, and that is okay. At Flyte, we work with brokers and employers on a wide range of tax-advantaged benefit options that can stand alone or complement an existing strategy. Here are a few great alternatives to consider:
- Traditional HRAs can help cover out-of-pocket costs alongside a group plan.
- Flexible Spending Accounts (FSAs) can let employees use pretax dollars for everyday expenses.
- Health Savings Accounts (HSAs) paired with HDHPs provide triple-tax savings and long-term growth.
- QSEHRAs are best for small employers under 50 who want to contribute toward individual plans without offering a group policy.
Whether you are ready for an ICHRA plan or looking for another approach, there is a tax-free path forward, and Flyte can help you navigate it.
So, What’s the Bottom Line?
Every employer wants to offer great benefits without unnecessary complexity, and every broker wants to deliver smart, sustainable solutions. ICHRA might not be right for everyone, and that is completely fine. The real value is in understanding your options and choosing a strategy that fits your goals, your team, and your long-term vision.
Whether you end up with ICHRA, QSEHRA, a traditional HRA, or a mix of benefits, you do not have to figure it out on your own. That is where Flyte comes in with practical experience, real support, and a commitment to helping you make the most of every dollar. We specialize in designing and administering flexible, compliant, and easy-to-manage health benefits with a human touch.
Curious if ICHRA, or something else, could work for you or your clients? Let’s talk. Schedule a quick call and let’s explore what’s possible.
