You’ve done the research, reviewed the numbers, and decided that switching to Individual Coverage Health Reimbursement Arrangements (ICHRA) is a smart move for your business.
Now it’s time to let your team know.
For many employees, ICHRA will be a new concept. A clear explanation helps them understand how it works, how they choose their own health insurance plan, and how the company supports them through the process.
If you’re a business owner, you’re not alone in navigating this transition. Thousands of employers across the country now offer an ICHRA as part of their benefits strategy, and the data backs it up.
According to Deft Research, 94% of employers report being satisfied or more satisfied after switching to an ICHRA model. The HRA Council found that 92% of employers who offered an ICHRA or HRA in 2024 renewed it the following year.
Inside, you’ll find a plain-English framework for explaining ICHRA to your employees, the questions your team is most likely to ask (with answers you can use word for word), a simple communication timeline, and resources that help employees feel confident about their options.
The Way You Explain ICHRA Matters
When most employees hear “we’re changing your health insurance,” their first reaction is worry over their health benefits. That’s why how you communicate this change matters as much as the change itself. You want your team to understand that they’ll have more control over their health care, not less.
Here’s what ICHRA means for your employees:
Instead of your company picking one health insurance plan for everyone, you give each employee money to choose their own plan. They can pick a plan that fits their life, their family, and their budget.
That’s the core message.
Start With the “Why”, Not the “What”
The biggest mistake employers make when explaining ICHRA is leading with the mechanics.
If you open with “ICHRA stands for Individual Coverage Health Reimbursement Arrangements, and here’s how the reimbursement process works…” you’ve already lost the room.
Your employees don’t need a lesson in health benefits policy. They really just need to know three things:
- Why is this change happening? You might say something like: “We’ve been looking at how we can offer better, more flexible health benefits without the unpredictable cost increases that come with traditional group health insurance. Instead of the company buying insurance for everyone, we’re moving to a model where the company funds your benefits directly and you pick the coverage that works for your life. ICHRA lets us do that.” The key here is to be honest about what led you to this decision.
- What does this mean for me? This is a chance to be specific: “You’ll receive a set dollar amount each month from the company. You use that money to buy a health insurance plan that works for you, because only you know your doctors, your prescriptions, and your family’s needs. The reimbursement you receive is tax-free, and you now own your insurance plan, not the company.”
- Am I going to be okay? This is the unspoken question that drives a lot of the initial worry from your employees. And your answer should be: “Yes. You’ll have support through this entire process. You won’t be on your own.”
A Sample Way to Open the Conversation
Here’s a simple framework you can use in a team meeting, an email, or a one-on-one:
“We’re making a change to how we handle health benefits, and I want to walk you through it. Instead of the company choosing one health insurance plan for everyone, we’re moving to a model where the company gives you money, tax-free, and you pick the health insurance plan that fits your life.
You’ll have help choosing a plan, and nothing about this change reduces the company’s commitment to your health care. We’re still investing in your benefits. We’re just giving you more say in how that investment works for you.”
How Does ICHRA Work? Explain It in Three Steps
Once you’ve set the “why,” your employees will want to know how ICHRA works day to day. Here’s how to break it down.
Step 1: The Company Sets a Monthly Health Benefits Budget
Explain that the business decides how much to contribute each month toward each employee’s health insurance premiums. This is the employer’s commitment: a fixed, predictable dollar amount.
You might say: “Instead of the company buying a group health plan and hoping it works for everyone, we’re putting money directly toward your plan.”
Step 2: Employees Choose Their Own Health Insurance Plan
Each employee shops for an individual health insurance plan. They pick the carrier, the coverage level, and the network that fits their needs.
A younger employee might choose a lower-premium plan. Someone with a growing family might pick broader coverage. An employee nearing retirement might coordinate ICHRA with Medicare. Every person gets to choose what makes sense for their life.
Step 3: The Company Reimburses the Employee
After the employee enrolls in their chosen health insurance plan, the company reimburses them, up to the budgeted amount, for their health insurance premiums. This reimbursement is tax-free for the employee.
If the employee’s plan costs less than the monthly allowance, some employers allow remaining funds to be used for other qualified medical expenses like copays, prescriptions, or dental visits.
If the plan costs more than the allowance, the employee pays the difference, but they still benefit from the employer’s contribution and may be able to take that extra cost as a pre-tax payroll deduction.
The Questions Your Employees Will Ask (and How to Answer Them)
Here are the most common questions that come up when ICHRA is introduced to team members:
“Can I keep my doctor?”
This is the number one concern for most employees. The answer is usually yes, and here’s why, using an example from Georgia:
Individual health insurance plans in Georgia are offered by the same carriers that offer group plans, including Anthem, Kaiser, Aetna, and Alliant. The networks are often identical or very similar to what employees had before. When employees shop for their own plan, they can specifically look for one that includes their current doctor and preferred pharmacy.
With ICHRA, each employee picks the network that works for them — the doctors they already see, the pharmacy they use.
“Will this cost me more?”
Be upfront, because the answer depends on the individual. For many employees, ICHRA can result in the same or lower out-of-pocket costs, especially when the employer contribution covers a good portion of the premium and the reimbursement is tax-free.
It can help to walk employees through the math. Show them the monthly ICHRA allowance you are planning to offer, let them compare it to real plan prices in their area, and help them understand the tax advantages. HRASimple models the change to ICHRA for each of our clients so that employers know how the costs will affect each employee.
“What if I already have coverage through my spouse?”
Employees who are covered under a spouse’s plan can opt out of the ICHRA. They won’t lose anything by declining, and they won’t be forced into a plan they don’t need.
This flexibility is one of the biggest advantages of ICHRA rules over traditional group health plans, which often require a minimum percentage of employees to enroll. With ICHRA, participation is voluntary and every employee gets to decide what’s best for their situation.
“How do I pick a health insurance plan? I’ve never done this before.”
Your support system can make this process a lot smoother for employees. Most have never shopped for individual health insurance and the process can feel new and a bit overwhelming, especially if they’re comparing carriers, coverage tiers, and networks for the first time.
This is why working with a qualified ICHRA administrator like HRASimple makes a difference. A good administrator connects your employees with benefits advocates who walk them through their options, answer questions, and help them find the right coverage.
At HRASimple, we serve as the benefits administrator for your business and the benefits advocate for your employees. That means that in addition to processing reimbursements, our platform and onboarding resources guide your team through the process of comparing plans, understanding key terms, and feeling confident about their decision. Your employees aren’t left to figure it out alone.
Build a Communication Plan (Don’t Wing It)
Explaining ICHRA isn’t a one-and-done conversation. The most successful transitions follow a phased communication approach that gives employees time to absorb, ask questions, and get comfortable.
90+ Days Before the Plan Year Starts
Hold a team meeting or town hall. Use the “why, what, and am I going to be okay” framework to explain the change to your employees. Keep it conversational and leave plenty of time for questions.
Send a formal ICHRA employee notice. The notice is required by law, and your administrator should provide it for you. It needs to include a description of the ICHRA, the employee’s right to opt out, how participation affects premium tax credit eligibility, the contribution amount, and information about the special enrollment period that gives employees time to shop for a plan.
60 Days Before
Share a one-page FAQ handout. Put the most common employee questions and answers in writing. HRASimple provides a Welcome To ICHRA booklet for each employee in their portal, and employees can refer back to this guide as they are making their decisions and when they’re talking it over with a spouse or family member at home.
Introduce your support team. Let employees know who their ICHRA administrator is and the role they play. If you’re working with HRASimple, this is when we introduce ourselves to your team and start building that relationship as their Benefits Advocate.
Help employees start shopping for plans. This is when your team should begin browsing their options and comparing coverage. Starting now gives them time to ask questions, talk it over with family, and make a confident decision. It also gives your ICHRA administrator time to process enrollments and handle carrier setup before the plan year begins. If employees need help selecting a plan, at HRASimple we can walk employees through available plans and answer any questions they may have.
30 Days Before
Wrap up enrollment. By now, most employees should have selected a plan. Follow up with anyone who hasn’t enrolled yet and offer one-on-one sessions for employees who have questions they don’t want to ask in a group setting. This is the final window to get everyone across the finish line.
After Enrollment
Follow up after the first 30 days. Once employees have enrolled in their plans and the ICHRA is up and running, check in with your team. Ask if they have questions about their coverage, whether they’ve had any issues using their new plan, and if they need help with anything. A quick check-in early on goes a long way toward building confidence in the new model.
Keep the door open. Let employees know they can ask questions anytime, not just during open enrollment. Benefits questions don’t follow a calendar, and your team should feel comfortable reaching out whenever they need help.
Remind employees to open and answer all communications from their benefits administrator and their new healthcare provider. Your employees now own their insurance plan, so any communications from their benefits administrator or their carrier (ex Cigna, BCBS, Ambetter, etc) could contain information that matters for continuing their coverage. Please remind employees to always answer emails, calls, or letters from their administrator and from their carrier.
Equip Your Managers to Answer Questions, Too
Employees often go to their direct manager with ICHRA questions before they talk to HR, the benefits administrator, and before reading any email you send. If your managers can’t answer basic questions about how ICHRA works, the confusion can multiply.
Your managers don’t need to become ICHRA experts. But a little prep goes a long way. Give them enough to feel confident, and make sure they know where to send people when questions get specific. Three things are worth covering:
What’s changing and why. Give managers a brief overview before the company-wide announcement so they’re not caught off guard. A 10-minute conversation is usually enough.
Where to direct questions. Make sure every manager knows who the point person is for benefits questions. That might be you, your HR coordinator, or your ICHRA administrator. At HRASimple, we’re available to answer employee questions directly, so your managers can point people to us.
What not to say. Managers should avoid guessing on specifics like tax implications, reimbursement rates, or health insurance options. Those are questions for you, your administrator, or a benefits advocate from their team.
Make the Transition to ICHRA Easier With the Right Partner
Explaining ICHRA to your employees shouldn’t have to be stressful, so it can be best to partner with an ICHRA administrator who can help throughout the transition process.
At HRASimple, we serve as the benefits administrator for your business and the benefits advocate for your employees. That means we help to create your plan documents, send the required notices, and walk your team through the enrollment process with real support right here in Georgia.
We’ve helped small and large employers across the country make this transition with the support they need to be successful. We know the carriers, the marketplace, and how to advocate for employees as they shift to a new benefits model.
If you’re a small business owner exploring whether ICHRA fits your team or if you’ve already decided and need help with the employee communication side, we’d welcome the conversation.
Talk to us about ICHRA to see if ICHRA is the right fit for your team.