ICHRA for Large Employers

Why large employers are turning to ICHRA

For years ICHRA was seen as a small-business tool. That has changed: Applicable Large Employers are now the fastest-growing adopters, up 34% year over year, with the 100–199 employee cohort growing nearly 50% (HRA Council, 2024–2025).

The appeal for large employers is the same as for small ones, just at scale: a fixed, predictable benefits budget instead of annual group-premium hikes, plus plan choice that fits a diverse, often multi-state workforce.

Does an ICHRA satisfy the ACA employer mandate?

Yes. An ICHRA is treated as an offer of coverage, so an ALE can use it to meet the employer mandate — provided the ICHRA is affordable and the individual plans employees buy are minimum essential coverage (which ACA-compliant individual plans are). This is general information, not legal advice.

Affordability for large employers

Affordability is the key compliance test. For 2026, an ICHRA is affordable if the employee''s cost for the lowest-cost Silver plan (employee-only), minus your allowance, is no more than 9.96% of the applicable income measure. Because employers rarely know household income, the Federal Poverty Line, Rate of Pay, and W-2 safe harbors let you prove affordability without it.

Affordability is tested per employee based on age and location, so a workforce spread across ages and rating areas needs a thoughtful allowance strategy.

Using employee classes at scale

ICHRA lets you tailor allowances across permitted classes rather than one flat number for thousands of people.

• Vary allowances by full-time vs. part-time, salaried vs. hourly, or geographic rating area.
• Vary within a class by age and family size.
• Mind the minimum class-size rules when mixing an ICHRA with a group plan: at least 10 for under 100 employees, 10% for 100–200, and 20 for more than 200.

Offering a group plan to some classes and ICHRA to others

Large employers often run a hybrid: a group plan for one class (say, full-time headquarters staff) and an ICHRA for another (remote, part-time, or field employees). You cannot offer the same class a choice between the two, but splitting by permitted classes — subject to minimum sizes — is allowed and common.

Cost control versus group renewals

A group plan hands you a renewal increase every year that you absorb. An ICHRA flips that: you set the allowance, so a 2,000-person budget is a number you decide, not one an insurer dictates. That predictability is often the single biggest driver for large employers with volatile claims experience.

Administration and reporting at scale

At size, administration matters. You will want a platform or broker-supported service to handle substantiation, reimbursements, payroll coordination, and required notices across the whole workforce. ALEs also report their ICHRA offer on Form 1095-C, just as they would report a group offer.

Rolling out to a large workforce

A smooth launch is mostly communication and timing.

• Announce early and explain how the allowance and individual coverage work.
• Align the ICHRA start with any expiring group plan so no one has a gap.
• Provide enrollment support during the special enrollment period the ICHRA offer triggers.
• Set up substantiation and reimbursement workflows before day one.

Common large-employer questions and pitfalls

The frequent missteps: setting one flat allowance that fails affordability for older employees, drawing class lines that violate minimum sizes, or underestimating the value of hands-on enrollment help for a big team. A broker experienced with ALEs heads these off.

Is an ICHRA right for your large company?

ICHRA tends to fit large employers who want predictable costs, have a geographically or demographically diverse workforce, or are frustrated with group renewals. It is less ideal if you are committed to a single richly-managed plan for everyone. If you are weighing it, a modeling exercise with a broker is the fastest way to see the numbers for your specific census.