ICHRA adoption has grown by more than 1,000% since 2020, with employers of all sizes continuing to adopt the insurance model at double-digit growth year after year, according to the HRA Council’s annual growth trends report for the ICHRA & QSEHRA markets.
The 2025 data published June 17 includes information from 15 current HRAC members and a control group of founding members who have contributed data since the launch of ICHRA in 2020. The report offers insights from both established service providers and new platforms, indicating that the ICHRA market is likely much larger than the current sample suggests. The HRAC report remains the most reliable analysis of ICHRA and QSEHRA growth trends.
ICHRA (Individual Coverage Health Reimbursement Arrangement) allows employers to provide tax-free funds for employees to purchase their own individual health insurance plans on the ACA marketplace, instead of offering a group plan.
QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) allows small employers to reimburse employees for individual health insurance premiums and other qualified medical expenses, with tax-free benefits.
Eight notes:
1. ICHRA adoption has increased by more than 1000% since 2020, and QSEHRA adoption has doubled during the same period.
2. More than 260,000 U.S. employees have been offered ICHRA or QSEHRA coverage for plan year 2025, and more than 13,000 U.S. businesses are participating in the ICHRA and QSEHRA ecosystem as of January 2025. The overall market is broadly estimated to contain between 500,000 to 1 million covered lives in 2025.
3. Large employer (more than 50 employees) ICHRA adoption is up 34% from 2024 to 2025. Small employer (fewer than 50 employees) ICHRA adoption is up 52%. The vast majority of HRA adoption comes from small businesses with 20 or fewer employees.
4. Among employers offering ICHRAs or QSEHRAs for the first time in 2025, 83% had not previously offered any coverage, while 17% transitioned from traditional group insurance.
5. More than 90% of employers offering an ICHRA or QSEHRA in 2025 are renewals of an HRA implemented in a prior year.
6. Employees ages 18 to 44 represent the largest share of marketplace enrollment via ICHRA and QSEHRA.
7. For 2025, nearly 70% of employees selected Gold or Silver-tier health plans via ICHRA and QSEHRA.
8. HRA Council members are reporting increases of 400-800% in employer requests for quotes for 2026 and 2027.
