Facing the steepest rise in employee health plan prices in 15 years, with costs projected to hit $18,500 per employee in 2026 (a 6.7% increase from 2025), a growing number of US employers are abandoning traditional group health insurance. Instead, they are opting for Health Reimbursement Arrangements (HRAs), which provide employees with a stipend to purchase their own health insurance on the Affordable Care Act (ACA) marketplace or other exchanges.
In 2026, over 20,000 companies adopted HRAs, marking a 53% increase from the previous year, according to the HRA Council. This shift mirrors the earlier trend of companies moving from pensions to 401(k)s, transferring more responsibility to employees. While ICHRAs (a newer version of HRAs) now cover an estimated 350,000 to 700,000 families, this is still a small fraction compared to the 160 million Americans covered by employer-sponsored group plans.
Employers like TURN Community Services, a Utah nonprofit, transitioned to ICHRA after facing a 19% rate increase on their group plan. This move cut their health benefit spending by approximately $500,000 annually for about 200 employees. Employees also experienced lower monthly out-of-pocket costs, though double-digit premium increases in the marketplace last year somewhat reduced these savings. The typical ICHRA enrollee received $459 per month from their employer in 2026 and paid $567 for their monthly premium.
