ICHRA Explained: Employer Benefits & Employee Cost Control

26 May 2026 · 1 min

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In this segment, the speaker clarifies that an Individual Coverage Health Reimbursement Arrangement (ICHRA) is still treated as a group-based health plan for the purposes of COBRA. Employers with more than 20 employees must continue to offer COBRA coverage when an employee leaves, even if the plan is an ICHRA. Additionally, employers with over 50 employees are required to offer health coverage or face penalties; an ICHRA satisfies this coverage requirement, avoiding fines. In contrast, simply eliminating benefits or providing a stipend does not count as offering group health coverage, which could trigger penalties. Therefore, in certain scenarios—particularly for larger employers—using an ICHRA can be a more compliance‑friendly option than a stipend or benefit elimination.

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offering that ICHRA, it is still a group-based plan. Okay. So you still have to make sure you offer COBRA. So COBRA is when someone leaves the organization. So if you've got more than 20 employees, it's still a group-based plan. You have to still offer COBRA. Now, still, it's an individual plan. Why anybody would take it, who knows? But that requirement is still there, and if you don't offer it— You have to administer it as such. If you're an employer that has more than 50 employees, you have to offer coverage or you can be fined. Okay. That ICHRA model does count as offering coverage. So there's no fine for doing it. Okay. Whereas if you just scrap benefits or do the stipend, it doesn't count as having group benefits. So there are situations where doing the ICHRA makes more sense.