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Key Takeaways:
ARTICLE | To ICHRA or Not To ICHRA?
Individual Coverage Health Reimbursement Arrangements (ICHRAs) have been getting an increasing amount of attention in recent years and are being touted as a potential next evolution in how employers support employee healthcare.
While the rate of adoption has been quite impressive in the little more than 4 short years since ICHRAs were first legislated into existence, however, the question remains as to whether the reality of what ICHRAs can deliver lives up to the hype they have been generating.
Thus far at least, the heightened attention surrounding ICHRAs and the resulting meteoric rise has only translated into a tiny sliver of market share, and although that market share has been obtained over a relatively short amount of time, the types of companies that are best suited to capitalize on the advantages that accompany ICHRA adoption are too few in number to make widespread adoption seem likely.
Essentially, ICHRAs provide employers of any size the opportunity to set aside a fixed amount of money each month/year that employees can use to cover healthcare expenditures like premiums, deductibles, copays, and other qualified medical expenses.
There are several aspects of ICHRAs that are very appealing to employers for obvious reasons, including that they enable employers to satisfy Affordable Care Act requirements via tax-deductible contributions as long as cash available for reimbursement meets or exceeds the minimum affordability standards.
Also, these accounts can be offered as standalone health benefits, or they can be offered in tandem with traditional employer-sponsored insurance, and there is no upper limit on reimbursement levels, which allows for significant flexibility in tailoring these arrangements to the needs of the talent pools that your organization hopes to attract and retain.
Further, compliance and administration for ICHRAs are theoretically simplified relative to traditional group-plan coverage, and risk/cost is limited due to the predetermined amount of reimbursement available each term.
At face value, the potential ICHRA appeal is immediately clear - risk limitation for employers and freedom of choice for employees - but a deeper analysis reveals a considerably more complex dilemma than may be apparent on the surface.
The story of the ICHRA can not be told without acknowledging the Health Reimbursement Arrangement (HRA) from which it evolved.
The IRS first recognized HRAs in 2002, and though the popularity of HRAs swelled throughout the early part of the century, in 2013 an interpretation of the Affordable Care Act effectively outlawed them for failure to comply with the new credible coverage rules.
Because many companies (especially those on the smaller side) were unable to provide any employee healthcare spending support at all in the wake of the HRA ban, however, Congress created the QSEHRA in 2016 to allow small employers to offer HRAs if they met certain conditions that made providing traditional health insurance coverage less feasible.
In 2019, the Department of Labor took the additional step of enacting rules to expand the access to HRAs to companies of all sizes, enabling the first ICHRAs to come online in 2020 and bringing the HRA adoption trend line full circle.
And while HRAs continue to be a major factor in employer-sponsored health coverage today, and make up a core component of most high-deductible health plans, which in turn make up about 45% of all employer-sponsored health plans, it is ICHRAs that are currently dominating the spotlight, with the number of companies offering ICHRAs last year increasing by more than 60% over the year before.
Supporters like to compare the current shift toward ICHRA adoption and away from traditional health insurance coverage offerings as analogous to the shift away from defined benefit retirement savings offerings toward defined contribution retirement savings plans.
In short, plenty of ICHRA proponents think that ICHRAs will eventually replace traditional healthcare benefits similar to how pensions have been largely replaced by 401ks and other investment vehicles over the last 40 years, and based on the year-over-year changes between 2022 and 2023, that possibility seems quite plausible.
As the chart below shows, there were about 2,500 employers offering ICHRAs in 2022, but that number jumped up by about 64% to an approximated 4,100 employers in 2023.
The QSEHRA adoption tells a somewhat different story, however, with only about an 8% increase between 2022 and 2023 in the number of small employers offering QSEHRAS bringing that figure from 6,000 up to an approximated 6,500.
Of course, QSEHRA adoption had a few years-long head start on ICHRA under the latest regulatory rules, which can partially explain the slower adoption rate for QSEHRAs relative to ICHRAs.
More importantly, however, the additional flexibilities built into ICHRAs have made QSEHRAs relatively obsolete for all but a small slice of qualifying small businesses, so the disparity in pace of growth between ICHRA and QSEHRA adoption is more likely to grow than shrink at this point.
For context however, even with this kind of significant levels of year-over-year adoption, ICHRAs went from accounting for 0.08% of employer-sponsored healthcare expenditures in 2022 to 0.1% of employer-sponsored healthcare expenditures in 2023, so the impact on the overall market still remains incredibly small for the time being at least, and that may not be a bad thing.
- Nearly two-thirds of employers (64%) that offer ICHRAs or QESHRAs have 5 or fewer employees;
- Only 6% of employers that offer ICHRAs or QESHRAs have 50 or more employees;
- The fastest growing segment of ICHRA adoption is by employers with 50 or more employees, which grew by more than 140% between 2022 and 2023; and
- The number of employers offering ICHRAs grew by 170% between 2022 and 2023 while the number of employers offering QSEHRAs grew by about 100% over the same period.
- 55% of employees insured via ICHRAs or QSEHRAs in 2023 were age 44 or younger.
It’s important to note that there are some understandable reasons driving interest in and adoption of ICHRAs. In fact, there are a number of situations in which ICHRAs or QSEHRAs may be the best available option for employers to support employee health care coverage.
First and foremost, employers that don’t intend to contribute at least 50% contribution toward total employee healthcare spending may be well-served by offering ICHRAs, which allow employers to specify and cap in advance the maximum amount of reimbursement available to each employee each one-year term.
This type of risk-limiting arrangement can be appealing to employers, especially those on the smaller side who may not have sufficient resources to fund traditional employer-based health insurance coverage.
Further, despite requiring employees to submit monthly any healthcare bills for which they are seeking reimbursement, ICHRAs are also considerably less complex and labor-intensive to administer than traditional employer-sponsored health plan management, which appeals to employers that may lack the necessary human resources or finance department/professional(s) capable of handling the workload.
ICHRAs also can be a good idea for employers with high turnover and/or whose employees primarily qualify as low-income and therefore can still obtain substantial discounts on health insurance through the public marketplace as a result, even after accounting for the ICHRA reimbursement funds available to them.
As the above example under the Advantages of ICHRA header makes clear, having a relatively small business and a small number of employees is the primary common factor linking the situations in which ICHRA adoption is most optimal, which seems to remain the case for both ICHRAs and the QSEHRAs that were designed specifically to accommodate the needs of small employers.
Interestingly, however, employers with 50 or more employees were the fastest growing segment in terms of ICHRA adoption between 2022 and 2023 nonetheless, even though employers with more employees and greater resources are often going to find that the disadvantages associated with ICHRAs outweigh any advantages they may have hoped to gain via implementing an ICHRA program.
For example, while it is true that ICHRAs set a hard limit on employer healthcare costs, that limit is only meaningful for employers that intend to provide less than market-competitive employee health benefit spending.
In reality, almost all employers covering 80% of an employee’s healthcare costs (which is the market average) are going to get a much better group rate for their employee pool than what individual employees would be able to obtain on their own through the ACA exchange, with the only exceptions being employers that have a very small number of low-income employees, as noted above.
The alternative, of course, is offering healthcare benefits that are below market rate, which is a strategy that comes with tangential disadvantages of its own, including productivity loss, higher turnover rates, and other talent acquisition and retention issues.
There are also some other potential - though relatively minor - issues with ICHRA administration that aren’t necessarily baked into the system but can be problematic nonetheless. ICHRAs rely on employees to submit their medical expense bills in a timely and consistent manner, for example, which doesn’t always result in lightening the administrative workload as much as expected.
Perhaps the main problem with ICHRAs, however, is that they are simply not currently designed to work in a complementary fashion with the current insurance broker model that undergirds the weight of the US healthcare system.
Similar to Medicare Advantage enrollment, initiating an ICHRA or QSEHRA program requires each employee to be enrolled individually. Currently, however, most brokers don’t really have an ICHRA enrollment vehicle to efficiently facilitate that process, so many traditional brokers who currently own employer accounts will no longer be able to collect the health commission and fees associated with those accounts, which would instead go to the Medicare-Advantage-type of enrollment broker.
Those Medicare-Advantage-type brokers, on the other hand, are unable to facilitate enrollment in dental and vision plans as well as other employee benefits that traditionally sit in the traditional insurance broker wheelhouse, further scrambling the division of responsibilities and the incentive structure as they currently exist in the insurance and employee benefits markets.
While there are clearly advantages that can be gained by implementing an ICHRA program, those advantages appear to be primarily applicable to a much smaller subset of employers than the current interest in ICHRAs and the accompanying expectation for their impact on employer healthcare provision norms in the future seem to indicate.
At the end of the day, however, for most employers other than those with only a small number of low-income employees, the disadvantages that come with ICHRAs will amount to more on balance than the advantages.
Although the ICHRA adoption growth rate still looks impressive, those rates are already slowing year-over-year just a handful of years after their introduction on the market.
Further, employers utilizing ICHRAs still make up an infinitesimal portion of overall market share at one-tenth of one percent, and with brokers and carriers both disincentivized to help expand the size of that market, adoption rates seem likely to continue slowing in the next few years.
Despite any clamor about a potential future in which ICHRAs play a much more prominent role in supporting employee health coverage, the numbers as they currently exist and the forces likely to shape those numbers going forward largely don’t support those conclusions.
NASHVILLE, Tenn., Sept. 10, 2026 /PRNewswire-PRWeb/ -- Mployer, the industry's leading employee benefits and insurance intelligence platform, today announced the winners of its sixth annual Top Employee Benefits Consultant Awards, recognizing a select 1,000 of the 15,000+ benefits brokerage and consulting office locations across the country.
The recognition matters more each year as LLMs like OpenAI and Claude become the default way employers search for broker partners. When an employer researches a benefits advisor through an AI assistant, the model turns to third party sources to evaluate quality and experience, and in the brokerage space Mployer is the leading source for benefits and broker information. Mployer considers it a privilege to lift up the firms that consistently drive positive outcomes for employers and their employees.
"Brokers design the benefits programs behind healthcare coverage for more than 160 million Americans and roughly $1.5 trillion in annual employer spend. Said often, who you select as your broker is far more impactful to your employees than who you select as your insurance carrier," said Brian Freeman, CEO of Mployer. "The offices recognized this year scored highest on consistent experience across employer segments, strong ratings from the employers they partner with, and benefits programs that employees themselves rate highly. Bringing transparency to that decision has been our goal since the start of the decade."
Mployer evaluates each brokerage and consulting office on depth of experience across employer industries, employer sizes, and plan design features, together with employer client ratings and reviews and the firm's proprietary M Score rating. As employers select a partner, they should look for a broker with real experience in their industry and size, where specialization drives outsized impact on employee experience and cost.
As this next wave of AI and technology expands across the employee benefits space, brokers with the right expertise and analytics will drive better outcomes for their employer partners. Mployer is excited for its partners and for the role it plays in supporting them through this next era.
The full list of 2026 winners is available at mployeradvisor.com/best-insurance-brokers. Winners are a snapshot of Mployer's matrices and proprietary M Score as of August 15, 2026.
About Mployer
Mployer is the industry's leading employee benefits and insurance intelligence platform, built for brokers, carriers, GAs, PEOs, and the employers they serve. Powered by more than 2 billion unique benefit data points and Anthropic, Mployer's suite of Catalyst, Insights, Vista, Pulse, and Atlas works for industry leaders benchmarking plans, analyzing claims, recommending growth strategies, and interpreting complex policies and legislation, in one platform. With its MCP Server and Claude Connectors, Mployer's data and AI are accessible across its products and directly within Claude. Learn more at MployerAdvisor.com.
Media Contact
Anthony Waters, Mployer, 1 (844) 743-6456, [email protected], MployerAdvisor.com
September 2026 Product Updates: Catalyst and Insights+
Each month, we introduce updates across Catalyst and Insights+ designed to make your workflow faster, reduce manual work, and put Mployer data where you need it.
This month, Catalyst makes prospecting and outreach easier with AI-powered email creation, more powerful search filters, improved industry and Workers' Comp data, broader access to Mployer data through AI assistants, and improvements to Advanced Analytics.
Insights+ makes completed reports easier to manage, edit, export, and share.
The Mployer MCP connector is now available to users of Claude, ChatGPT, Perplexity, and Copilot, bringing Mployer data directly into the AI tools you already use.
Here’s what’s new.
Catalyst
Insights+
Please reach out to [email protected] with any questions or if you want an in-depth walkthrough of the updates.
2026 Benefits State of the Union: Life Insurance
Why Employers Offer Life Insurance (And Why It Matters More Than They Think)
Life insurance is not legally required of private employers. There is no federal mandate compelling you to offer it. And yet 83% of employers do. That near-universal adoption is not driven by regulation. It is driven by the recognition that a basic life insurance benefit is one of the clearest signals an employer can send about how it views its relationship with the people who work there.
At its core, employer-sponsored group life insurance provides a death benefit to an employee’s designated beneficiaries if that employee dies while covered under the plan. For most employees, particularly those with families and financial dependents, that coverage represents real peace of mind. It costs the employer relatively little to provide. It means a great deal to the employee who has it. And when it is absent, employees notice, especially those at stages of life where financial protection for their families is a priority.
This post approaches life insurance from the employer’s perspective: what you are providing, how to structure it, what the market looks like, how to explain it to your workforce, and what questions to ask at your next renewal. Life insurance rarely wins a job offer on its own. But it is a visible component of a benefits package that candidates and employees evaluate as part of the whole picture.
What You Are Actually Offering: Key Terms and Plan Types
Understanding the vocabulary of group life insurance is the starting point for making good decisions about it and communicating clearly about it to employees.
Offer Rates: Basic Life and Voluntary Life
83% of employers offer basic employer-paid life insurance nationally. Among those employees whose employers offer it, 97% are enrolled, one of the highest participation rates of any benefit. That near-universal enrollment reflects how employees treat basic life insurance: when it is offered at no cost, virtually everyone accepts it. 96% of basic life plans are noncontributory, meaning the employer absorbs the full premium cost.
Voluntary life, offered by 92% of employers, allows employees to purchase additional coverage beyond the employer-paid basic amount. Voluntary life is typically employee-paid at group rates, which are generally lower than individual market rates and, critically, often available without medical underwriting up to a guaranteed issue amount. For employees who want more than 1x salary coverage or whose family situation warrants higher protection, voluntary life is how they get it without going through individual underwriting. Offering voluntary life costs the employer very little in direct dollars, since employees fund it themselves, but it adds meaningful value to the benefits package and is worth communicating clearly at open enrollment.
How the Benefit Is Structured: Flat Dollar vs. Earnings Multiple
Nearly half of employers set life insurance as a variable percentage of earnings, typically expressed as 1x, 2x, or another multiple of annual salary. About a third use a flat dollar amount. The choice between these two structures has meaningful implications for both the employer and the employee.
Flat dollar plans are simple to administer and easy for employees to understand. A $50,000 life insurance benefit is a $50,000 life insurance benefit. The limitation is that a flat dollar amount set years ago may have become inadequate as wages and inflation have risen. An employee earning $90,000 with a $25,000 flat life insurance benefit has coverage that would not cover a year of their salary. Flat dollar plans should be reviewed periodically against wage growth, not just against the carrier market.
Earnings multiples scale automatically. When an employee receives a raise, their life insurance coverage increases proportionally without any plan amendment or administrative action. For employers with meaningful variation in compensation across the workforce, an earnings multiple ensures that the benefit stays proportionally relevant for all employees. The tradeoff is slightly more complexity in administration and in communicating the benefit to employees who need to understand that their coverage changes with their pay.
Among flat dollar plans, the range is significant: from $8,500 at the 10th percentile to $48,793 at the 90th percentile. An employer with a $10,000 flat dollar benefit is offering a benefit that does not cover even a quarter of the median household income. That is a visible gap to employees who are evaluating their financial protection.
The Earnings Multiple Market: One Times Pay Dominates
62% of earnings-multiple plans use exactly 1x salary as the benefit level. 21% use 2x, and 13% sit between 1x and 2x. Only 3% go above 2x salary.
1x salary is the market standard, but it is worth being honest with employees about what that means in practice. Financial planning guidance consistently suggests that individuals need 10 to 12 times their annual income in life insurance to adequately protect dependents over the long term. 1x salary covers roughly one year of income replacement before an employee’s family needs to find another source of financial support. For an employer, providing 1x salary as a baseline and offering voluntary life insurance for employees who want more is a reasonable and common approach. What matters is communicating both clearly: here is what the company provides, and here is how you can supplement it if your situation warrants it.
The maximum benefit cap data shows wide variation across the market. The median maximum benefit under earnings-multiple plans is $321,154, but this rises steeply toward the top: $693,182 at the 75th percentile and $1,416,667 at the 90th percentile. These high caps are most common among plans designed for organizations with significant executive or high-income populations, where a 1x or 2x multiple on a high salary generates a large face amount. Setting an appropriate maximum benefit is a plan design decision that affects both cost and equity across the workforce.
Portability and Communication: Two Places Most Employers Fall Short
Two of the most underutilized dimensions of employer-sponsored life insurance are portability and active communication. Both represent real value that most employees never fully receive because employers do not proactively surface them.
Portability
When an employee leaves your organization, what happens to their life insurance coverage? In most group plans, it ends. But many group life plans offer portability, the option for a departing employee to convert their group coverage to an individual policy or take a portable term policy with them, without having to go through medical underwriting again. For an employee who has developed diabetes, heart disease, or any other condition while employed, this feature can be the difference between being able to obtain affordable life insurance and being priced out of the individual market entirely.
Portability terms vary by carrier and plan design. Some plans allow full portability of the basic benefit; others allow conversion only. Some require the employee to act within 31 days of separation. Employers who know what their plan offers and communicate it proactively at offboarding, not just in the fine print of a benefits guide, are delivering real value to departing employees at a moment when that information is most useful.
Communication
Group life insurance has a 97% enrollment rate when offered at no cost, but a significantly lower rate of employee understanding. Most employees know they have life insurance through their employer. Very few know the face amount, whether it is set as a multiple of their salary, what their current death benefit would be, whether they have AD&D coverage, or whether the plan is portable. The annual open enrollment period is the most reliable moment to give employees a clear, plain-language statement of what they have: your current life insurance benefit is X dollars, which represents approximately Y months of your salary, and you have the option to increase your coverage to Z through voluntary life.
This is not just an employee wellbeing gesture. It is an employer brand decision. Employees who understand and appreciate their benefits are more likely to value their total compensation accurately, which affects retention.
The Carrier Market: Fragmented and Worth Shopping
The group life insurance carrier market is meaningfully fragmented. No single insurer holds more than 11% of employers nationally, and the top four carriers combined cover less than 40% of employers. The All Others category at 63% of employers reflects a long tail of regional carriers, specialty insurers, and smaller national players that collectively write the majority of group life business.
The participant view looks different. MetLife, which ranks outside the top two by employer count, covers 20% of participants by covered lives, reflecting its strength at large-employer accounts with high headcounts. Sun Life’s 12% participant share relative to a smaller employer-count share follows the same pattern: large-account concentration that does not show up proportionally in employer count.
The fragmentation of this market is good news for employers at renewal. There is no single dominant carrier with pricing power, and switching carriers on a group life plan is relatively straightforward compared to switching a medical carrier. Employers who have not formally gone to market on group life in three or more years are worth doing so. Premium rates, portability terms, guaranteed issue amounts for voluntary life, and AD&D inclusion can vary meaningfully across carriers at the same coverage level.
Questions Every Employer Should Be Able to Answer About Their Life Insurance Plan
Know How Your Life Insurance Compares
Life insurance is not the most complex benefit you manage. But it is one where the gap between what employers think they are providing and what employees actually understand and value is consistently wide. The employers who close that gap, by structuring the benefit deliberately, communicating it clearly, and knowing how it compares to market, are the ones who get credit for it.
Mployer’s benefits rating evaluates life insurance benefit levels, plan structure, and voluntary life availability as part of the Ancillary pillar score, benchmarked against employers in your industry, region, and size band.
See how your benefits package compares to your custom cohort at MployerAdvisor.com.
Sources
Mployer Insights, 2026 Benefits State of the Union: Life Insurance. Source: Mployer Insights analysis of 76,000+ employer benefit plans. All Size Avg, All Region Average, All Industries.
Carrier market share data sourced from Catalyst, a leading analytics platform for carrier market share in the benefits industry. Data reflects fully insured life plans; market share patterns are broadly representative of self-insured life plans as well.
AD&D benefit data: Mployer Insights, 2026 Benefits State of the Union. 25th percentile $150,000 / 50th percentile $300,000 / 75th percentile $500,000.
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