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A stipend, not a shared pool.
Instead of buying one group plan for everyone, you set a monthly allowance. Employees shop the individual market and buy the plan that fits them, tax-free, up to that allowance. Your cost is fixed, no matter what happens in the group.
It depends on how spread out your team is.
ICHRA works best for teams that are remote, multi-state, or have very different needs person to person, since everyone picks their own plan instead of one plan trying to fit everyone. Ignition prices what an ICHRA would cost against your current group plan before you switch.
Step 1 · Share the basics. A short form and your census.
Step 2 · See your numbers. What an ICHRA allowance would cost against your current plan.
Step 3 · Review and choose. Group and ICHRA options side by side. You decide.
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AWM Capital — $156,914 saved in 30 minutes.
Light Labs — A finished renewal turned into $113,115 in savings.
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FAQs
What is an ICHRA?
An individual coverage health reimbursement arrangement. You set a monthly allowance, employees buy their own individual health plan, and you reimburse them tax-free up to the amount you set. It's been legal since 2020.
Is there a minimum company size?
No. There's no minimum size and no cap on what you can contribute. Company size isn't what decides whether an ICHRA fits.
How is it taxed?
Reimbursements are deductible for you, free of payroll taxes, and tax-free to the employee.
What does the admin actually involve?
Substantiation rather than enrollment. Every employee has to prove they bought and kept qualifying coverage, and you reimburse against that. Most companies run it through a platform.
Can employees choose between our group plan and the ICHRA?
Generally no. You can split by employee class, full-time against part-time, or by location, but you can't let people pick individually.
What is the affordability test, and why does the allowance matter so much?
For 2026, your offer counts as affordable if what an employee pays for the lowest-cost self-only silver plan in their area, after your allowance, is under 9.96% of their household income. If it's affordable, they can't also claim a premium tax credit. If it isn't, they can decline your ICHRA and take the credit instead. The allowance decides which.
What's the catch?
Capping your spend doesn't remove the cost, it moves the variability to your employees. If individual premiums rise and your allowance doesn't, they pay the difference.
If we can't find a better setup than what you've got, we'll tell you on the call.
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