What is an ICHRA?
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is an IRS-approved employer benefit available since January 2020. Instead of sponsoring a group health plan, you set a monthly tax-free allowance and reimburse employees for the individual health insurance they choose on the open market — on or off the ACA Marketplace.
There is no minimum employee count, no minimum contribution, and no participation requirement. Employers of any size — from 1 employee to 500 — can offer an ICHRA. Nefouse & Associates has been helping Indiana employers navigate the benefits landscape since 1991, and ICHRA is one of the most powerful tools we've seen emerge in that time.
IRS-Approved Since January 2020
Authorized under federal regulations finalized in 2019. Reimbursements are income-tax and payroll-tax free for employees — fully deductible as a business expense for employers.
You Control the Amount
Indiana imposes no contribution floor or ceiling. You set the allowance that fits your budget and can vary it by employee class — full-time, part-time, age-banded, geographic location.
Employees Must Have Individual Coverage
To receive reimbursements, employees must be enrolled in an ACA-compliant individual plan. Indiana carriers include Anthem BCBS, Ambetter, Aetna, CareSource, Cigna, and US Health & Life.
Projected to Reach 15 Million by 2032
The HRA Council forecasts ICHRA will grow from roughly 450,000 covered lives today to 15 million Americans by 2032, driven by rising group premiums and growing employer awareness.
How We Generate Your Proposal
From your first conversation to a ready-to-present proposal, Nefouse & Associates does the heavy lifting — plan design, contribution modeling, compliance documentation, and employee communication. Here's exactly what that looks like.
Gather Your Census
We start with a simple employee census — headcount, employment classes, ZIP codes, and any existing benefit spend. Most employers can provide this in under 15 minutes.
Model Your Contributions
We run side-by-side contribution scenarios against your current group plan cost. For ALEs, we include IRS affordability modeling. For Indiana small businesses, we factor in the HB 1004 tax credit to show your true net cost.
Map the Individual Market
We pull available ACA-compliant carrier options by employee ZIP code so your proposal shows employees exactly what plans they'd have access to and at what premium ranges.
Deliver a Complete Proposal
You receive a clear employer-ready proposal: recommended contribution structure, estimated savings vs. current cost, employee plan options by class, compliance checklist, and a plain-English executive summary.
ICHRA vs. Traditional Group Coverage
ICHRA solves the biggest pain points of traditional group health — unpredictable renewals, rigid plan design, and minimum participation requirements — while giving employees something group plans rarely deliver: genuine choice.
| Feature | ICHRA | Group Plan |
|---|---|---|
| Fixed, predictable employer costs | ✓ | ✗ |
| Employee chooses their own plan | ✓ | ✗ |
| No minimum participation required | ✓ | ✗ |
| No annual premium rate increases | ✓ | ✗ |
| Tax-free for employees | ✓ | ✓ |
| Tax deductible for employer | ✓ | ✓ |
| Works for any company size | ✓ | ✗ |
| Indiana HB 1004 state tax credit | ✓ | ✗ |
| Multi-state workforce support | ✓ | ✗ |
| ACA mandate compliant (ALEs) | ✓ | ✓ |
| Sources: HRA Council 2025 · SureCo 2025 · KFF 2024 Employer Survey · IRS Notice 2019-45 · Indiana DOR Bulletin #122 | ||
ICHRA Market Momentum
ICHRA is no longer a niche workaround — it's a fast-growing mainstream benefits strategy backed by hard employer data and double-digit annual adoption growth.
Indiana's Exclusive ICHRA Tax Credit
Indiana became the first state in the nation to enact an ICHRA-specific tax credit for small businesses, effective January 1, 2024 under House Bill 1004 (Health Care Matters). No other state had a comparable standalone program at the time of passage.
Indiana HRA Tax Credit — HB 1004
- Eligible businesses: fewer than 50 FTEs with any Indiana state tax liability (C-corps, LLCs, S-corps, partnerships)
- ICHRA contribution must meet or exceed any previously offered health benefit
- Statewide cap of $10 million per fiscal year — first-come, first-served. Applications open January 2027.
- Unused credits carry forward up to 10 years
- Indiana is the only state with this credit today — Ohio, Georgia, and Texas are exploring similar legislation
Who Can Offer an ICHRA?
Almost any employer can establish an ICHRA — there is no minimum employee count and no industry restriction. The primary requirement is that participating employees must be enrolled in qualifying individual health insurance.
Under 50 Employees
The sweet spot for ICHRA — and the group eligible for Indiana's HB 1004 tax credit. Over 83% of employers choosing ICHRA in 2025 had never previously offered any coverage.
50–200 Employees (ALEs)
A properly structured ICHRA satisfies the ACA employer mandate when contributions meet the IRS affordability threshold (9.96% of household income for 2026). Large employer adoption jumped 34% in 2025.
Remote & Mixed Workforces
Employees across multiple Indiana counties or multiple states can each shop their own local market — eliminating network gaps and coverage inequities common in group plans.
Frequently Asked Questions
The questions we hear most from Indiana employers considering the move from group coverage to ICHRA.