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Case Study: Implementing ICHRA to Address Rising Healthcare Costs


A small-sized company with 48 employees faced a significant challenge in managing the increasing costs of their traditional group health insurance plan. Additionally, they were unable to meet the strict participation requirements imposed by insurance carriers. The company’s workforce was aging, with employees earning annual wages ranging from $35,000 to $55,000, which made healthcare affordability a pressing concern for both employees and their dependents.


To address these challenges, the company decided to implement an Individual Coverage Health Reimbursement Arrangement (ICHRA). They recognized that this approach would allow them to offer more flexibility in healthcare options while still providing some financial support to their employees.

The key components of their ICHRA implementation included:

Nominal Employer Contribution: The company contributed $250 per employee per month towards healthcare costs. This contribution helped to make healthcare coverage more accessible to their employees.

Utilizing Government Subsidies: Recognizing that many of their employees fell within the income range for government assistance, the company encouraged its workforce to explore the Annual Premium Tax Credits (APTC) offered by the government. These credits helped employees and their dependents pay for insurance premiums.

Dependent Coverage: The ICHRA plan extended to cover dependents, allowing employees with families to benefit from the employer’s contribution and government subsidies.


The implementation of ICHRA yielded several positive outcomes for both the company and its employees:

Cost Savings for the Company: By switching to ICHRA, the company reduced its healthcare expenses while still offering a valuable benefit to employees. The $250 per month per employee contribution was more sustainable than the previous group insurance plan.

Improved Employee Affordability: Many employees, particularly those with lower incomes, found that ICHRA, combined with government subsidies, made health insurance premiums much more affordable. This significantly reduced the financial burden on employees.

Increased Flexibility: Employees now had the flexibility to choose healthcare plans that best suited their individual needs and preferences, rather than being limited to a single group plan.

Higher Employee Satisfaction: The ability to choose their own healthcare plans and the financial support provided by the employer and government subsidies led to increased employee satisfaction and morale.

Family Coverage: Employees with dependents were able to provide healthcare coverage for their families at an affordable cost, with many qualifying for 100% subsidized health insurance plans.


In conclusion, the implementation of ICHRA allowed this company to adapt to the changing landscape of healthcare costs and offer a more flexible and affordable solution to their employees. It not only eased the financial burden on employees but also resulted in cost savings for the company, improved job satisfaction, and ensured that employees and their families had access to essential healthcare coverage. This case study demonstrates the effectiveness of ICHRA as a viable alternative to traditional group health insurance plans for mid-sized companies facing rising healthcare costs.

Please contact Palmetto Insurance group to see how implementing an ICHRA benefit plan will impact your company.

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