Individual Coverage Health Reimbursement Arrangements (ICHRAs) are becoming a popular option for small businesses across Colorado. For employers who want to offer meaningful health benefits without the rising costs and complexity of traditional group health insurance, an ICHRA provides flexibility, cost control, and employee choice.
What Is an ICHRA?
An ICHRA allows employers to reimburse employees for individual health insurance premiums and certain qualified medical expenses. Instead of selecting a single group plan for everyone, your business provides a defined monthly benefit, and employees choose the health insurance plan that best fits their needs on the individual market—including through the Colorado Health Insurance Marketplace
Benefits of an ICHRA for Colorado Employers
1. Employee Choice
Every employee has unique health needs. With an ICHRA, employees can shop for coverage that matches their family situation, preferred doctors, and budget. This means your workforce isn’t locked into a one-size-fits-all plan.
2. Customization and Flexibility
ICHRAs let you design benefits around your team. Employers can offer different reimbursement amounts based on classes of employees (full-time, part-time, seasonal, or by location). This flexibility helps Colorado employers attract and retain talent in a competitive labor market.
3. Cost Control for Employers
Healthcare costs are a top concern for small businesses. With an ICHRA, you set a defined budget for health benefits. That predictability makes it easier to manage expenses without unexpected renewal increases common in traditional group plans.
4. Compliance with ACA Requirements
ICHRAs can be structured to help your business meet Affordable Care Act (ACA) employer mandate requirements. That means you can stay compliant while offering employees real choice in their coverage
5. Tax Advantages
Reimbursements made through an ICHRA are generally tax-free for both the employer and the employee, provided employees are enrolled in coverage that meets minimum essential coverage (MEC) standards
Why ICHRAs Make Sense in Colorado
Colorado’s individual health insurance market is robust, with multiple carriers and plan options available through Connect for Health Colorado. This gives employees a wide range of choices, while small businesses can avoid the administrative burden of managing group plans.
For employers in industries with seasonal workers (like tourism, hospitality, and agriculture) or businesses with a mix of part-time and full-time staff, an ICHRA provides the flexibility needed to tailor benefits by role and budget.
Key Takeaway
For Colorado small businesses, an ICHRA can be a cost-effective, flexible, and compliant way to provide meaningful health benefits. It gives your employees the power to choose their own coverage, while giving your business financial control and peace of mind.
Ready to Explore ICHRAs for Your Business?
If you’re a Colorado employer looking for a smarter way to offer health benefits, an ICHRA could be the solution. Our team at Conexus Insurance Partners can help you evaluate your options, set a budget, and design a reimbursement strategy that works for your business and your employees.
👉 Contact a Conexus advisor today to learn how an ICHRA can benefit your team.