ICHRA Administration: How employers scale an ICHRA without creating more work

A question that almost every employer asks after learning about ICHRA is: “How much work will this create?”

While an Individual Coverage Health Reimbursement Arrangement (ICHRA) can give you more control over healthcare costs and more flexibility than traditional group plans, it does introduce new administrative responsibilities.

The good news is that employers typically don’t handle all of those responsibilities themselves. ICHRA administrators often handle the day-to-day operations, with a broker or advisor available to consult.

Key takeaways

• ICHRA administration doesn’t have to create more work. With the right support and technology, many employers find that managing an ICHRA fits seamlessly into their existing benefits processes.
• The biggest compliance risks — missed notices, affordability errors, skipped ACA reporting — are all preventable with the right processes in place.
• Employee education and enrollment support are often just as important as reimbursement and reporting workflows.
• Platforms like Iris by eHealth can automate many of the operational tasks involved in managing an ICHRA.

At a glance: What ICHRA administration involves

When employers ask how much work an ICHRA creates, these are the activities they’re usually referring to:

Administrative area	What it includes
Plan setup	Employee classes, allowance design, plan documents
Employee communications	Notices, enrollment support, ongoing education
Coverage verification	Confirm employees are enrolled in eligible coverage
Reimbursements	Process premiums and eligible medical expenses
Compliance	Affordability testing and ACA reporting requirements
Ongoing administration	New hires, life events, employee changes, renewals

Who manages ICHRA administration?

When it comes to who manages an ICHRA, often the employer owns the benefit strategy, brokers and advisors shape plan design, and an administration platform handles the operational and compliance work day-to-day.

Responsibility	Typically managed by
Benefit strategy and budget	Employer
Plan design recommendations	Broker or advisor
Employee plan selection	Employee
Plan documents and notices	Administration platform
Coverage verification	Administration platform
Reimbursement workflows	Administration platform
Ongoing oversight	Employer and advisor

How do employers typically administer an ICHRA?

There are two common approaches:

Approach	How it works
Self-administered	Internal HR or finance teams manage notices, reimbursements, compliance requirements, and ongoing administration. This can work for smaller organizations but often becomes more time-intensive as the workforce grows.
ICHRA administration partner	A dedicated administrator and technology platform handle key administrative and compliance tasks, helping employers streamline operations, stay compliant, and reduce manual work.

The goal isn’t to eliminate administration. It’s to make it repeatable, efficient, and scalable.

What ICHRA administration looks like throughout the year

Once an ICHRA is up and running, administration follows a fairly predictable rhythm — and much of it happens behind the scenes.

Before launch	During enrollment	Throughout the year
Create plan documents Define employee classes Set allowance amounts Review affordability	Send employee notices Help employees enroll Confirm eligibility Answer employee questions	Verify coverage monthly Process reimbursements Manage employee changes Prepare year-end reporting

That’s one reason administration often feels less burdensome in practice than employers initially expect — especially with a platform handling the recurring tasks.

Employee experience drives adoption

The day-to-day work of administering an ICHRA isn’t just about processing reimbursements and staying organized. It’s also about helping employees understand and use their benefit successfully.

Unlike a traditional group health plan, where employees choose from a limited set of employer-selected options, an ICHRA asks employees to shop for and enroll in their own individual health insurance coverage. For many employees, that’s a new experience.
Learn more about the difference between ICHRA and traditional group health insurance plans.

eHealth’s original research from fall 2025 found that 68% of people with employer-sponsored coverage liked the idea of employers providing funds to shop for their own ACA Marketplace coverage — the same approach used by an ICHRA.

Even so, employees often need guidance to navigate their options confidently. Employers that invest in clear communication, shopping support, and ongoing education tend to see smoother adoption and fewer employee questions. Those that don’t often face confusion, even when the benefit itself is generous. The administrative challenge isn’t just running the ICHRA — it’s helping employees navigate it confidently.

Three compliance areas that need the most attention

Supporting employees is only one part of successful ICHRA administration. Employers also need to meet a number of ongoing compliance requirements. Most compliance requirements are predictable — and that also means they’re avoidable. These three areas are where employers may run into the most difficulty.

1. Employee notices

KEY DEADLINE Employers must issue an ICHRA notice at least 90 days before the start of each plan year. For a January 1 start date, that means notices must go out by October 3 at the latest.

The notice isn’t just a formality. It helps employees understand their ICHRA offer and make informed coverage decisions. It must clearly explain the allowance amount, the requirement to enroll in qualifying coverage, and how the ICHRA affects eligibility for ACA premium tax credits.

For new hires who become eligible mid-year, the notice must go out no later than their eligibility date.  Missing or late notices are one of the most common — and most preventable — ICHRA compliance failures.

2. Affordability

If your organization has 50 or more full-time equivalent employees — known as an Applicable Large Employer (ALE) — your ICHRA must meet certain affordability standards. For 2026, an ICHRA is considered affordable if the employee’s remaining cost for a self-only Silver plan is no more than 9.96% of their household income after applying the allowance.

Because most employers don’t know their employees’ household income, the IRS provides three safe harbors: W-2 wages, rate of pay, and the federal poverty line. The federal poverty line method is the simplest to apply and the most conservative. Affordability should be tested before you finalize contribution amounts — not after.

3. ACA reporting

CAN BE OVERLOOKED ACA reporting is required for all ICHRA employers — not just large ones. Any employer offering an ICHRA must file, regardless of size.

Because ICHRA plans are treated as self-funded arrangements under IRS rules, employers must complete ACA reporting each year.

For the 2027 reporting cycle: Forms 1095-B or 1095-C must be provided to employees by March 2, 2027, and Form 1094-C filed electronically with the IRS by March 31, 2027. Start gathering the data you’ll need in December 2026 — waiting until February makes accurate filing significantly harder.

Potential ICHRA administration mistakes — and how to avoid them

Most ICHRA compliance problems are predictable — which means they’re also avoidable. Here are five mistakes that may come up, and what to do instead.

The mistake	How to avoid it
Missing the 90-day employee notice deadline	Set a reminder 100+ days before your plan year starts. Use a platform that generates and sends notices automatically.
Setting allowances without checking affordability first	Run affordability calculations before finalizing contribution amounts, not after. Use one of the three IRS safe harbors.
Writing employee class definitions that overlap or are unclear	Define each class using clear, objective criteria and write them into your plan document before launch.
Leaving ACA reporting until tax season	Start tracking the data you’ll need in December. ACA reporting applies to all ICHRA employers, regardless of size.

Most compliance issues don’t happen because employers don’t care. They happen because manual processes become difficult to maintain as organizations grow.

Do employers need an ICHRA administration platform?

Technically, no. Employers can administer an ICHRA internally, just as they can manage many other employee benefits.

But in practice, administration becomes more complex as organizations grow. Employee classes need to be maintained. Coverage must be verified each month. Notices need to go out on time. Reporting requirements need to be tracked year-round.

As ICHRA adoption continues to grow, more employers are looking for ways to manage these responsibilities efficiently. According to the HRA Council, an estimated 500,000 to 1 million people are now covered through ICHRAs, including employees and their dependents.

For a small employer with a simple, single-class setup, manual administration may be manageable. For organizations with multiple classes, distributed teams, or ALE responsibilities, an administration platform can become part of the operating model — not a luxury.

How Iris by eHealth can help employers scale ICHRA administration

Successful ICHRA administration is about making sure the right work happens consistently — without it falling through the cracks.

Iris by eHealth helps employers, advisors, and employees manage the operational side of ICHRA from a single platform:

Administrative task	How Iris helps
Plan setup	Flexible contribution structures across employee classes, configured to match each employer’s plan design.
Employee notices	Built-in employer and employee education, including onboarding support and training to help ensure a smooth transition to ICHRA.
Coverage shopping	Employees can compare hundreds of ACA-compliant medical, dental, and vision plans from approximately 50 national and regional carriers, with employer contributions shown alongside plan options.
Coverage verification	Online or phone enrollment with help from licensed insurance agents, plus ongoing support throughout the year.
Reimbursements	Integration with leading insurers for seamless, accurate enrollments and real-time coverage status checks.
Affordability reviews	Automated premium payments and integrated payment workflows designed to reduce coverage gaps and service issues.
ACA reporting support	Smart, data-driven quoting technology helps employers structure affordable contributions while supporting ACA compliance. Employers using eHealth’s ICHRA solution saved an average of 19% per employee compared to traditional group health insurance.
Employee lifecycle events	Brokers can maintain agent-of-record status and client relationships, with licensing and advisory support available in states where needed.

For employers, the value is less administrative burden and greater visibility into the benefit. For brokers, it’s a more scalable way to support clients. For employees, it’s a more guided, less overwhelming enrollment experience.

Summary: ICHRA administration

Every health benefit requires administration. ICHRA is no different.

When administration is handled effectively, employers can focus less on paperwork and more on what they were looking for in the first place: greater cost control, more flexibility, and a health benefit that works for a modern workforce.

For employers still evaluating plan design options, understanding how to compare ICHRA plans can help ensure the benefit aligns with workforce needs, budget goals, and compliance requirements.

Frequently Asked Questions:

1. Will an ICHRA replace our group health plan, or can we offer both?

Both are possible. Employers can fully replace a group plan with an ICHRA, or offer an ICHRA to some employee classes while continuing group coverage for others — as long as the classes are defined using IRS-approved criteria and the same class isn’t offered a choice between the two. A QSEHRA cannot be offered in the same year as an ICHRA for the same class of employees.

2. What’s the difference between an ICHRA, a QSEHRA, and other HRAs?

An ICHRA allows employers of any size to reimburse employees for individual health insurance and medical expenses, while a QSEHRA is limited to small employers and has annual contribution limits. Other HRA types may have different eligibility and reimbursement rules. Learn more about ICHRA vs. QSEHRA and ICHRA vs. other HRAs.

3. Can you start an ICHRA at any time?

Yes, if you aren’t already offering employees insurance. Employers can start an Individual Coverage HRA (ICHRA) at any time during the year. Unlike traditional group health plans, an ICHRA doesn’t have to begin on January 1. If an employer launches an ICHRA mid-year, eligible employees may qualify for a Special Enrollment Period (SEP) to enroll in individual health insurance coverage outside the annual Open Enrollment Period. Employers generally must provide eligible employees with advance notice before the ICHRA begins.

4. Can employees with an ICHRA still get ACA premium tax credits?

Generally no, if the ICHRA is considered affordable. If unaffordable, employees can opt out of the ICHRA and may qualify for marketplace subsidies instead.

5. Can ICHRA allowances roll over if unused?

This depends on plan design; employers can choose to allow rollover within IRS limits or have unused amounts expire at year-end.

Sources:
Healthcare.gov: Exploring coverage options for small businesses
Internal Revenue Service (IRS): Health Reimbursement Arrangements (HRAs) Centers for Medicare & Medicaid Services (CMS): Health Reimbursement Arrangements
Peterson-KFF Health System Tracker: Explaining Individual Coverage Health Reimbursement Arrangements (ICHRAs)
HRA Council: Growth Trends for ICHRA & QSEHRA

MMR-4264-2026

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