ICHRA: Solving the Small Business Health Coverage Conundrum with Choice and Stability
Small businesses drive Ohio’s economy. They create jobs, anchor local communities and fuel innovation across our state. Yet for many, one challenge remains stubbornly difficult to overcome: offering affordable, high-quality health coverage to attract and retain employees without breaking the bank.
Ohio lawmakers now have an opportunity to help. Last summer, the Ohio House of Representatives unanimously passed House Bill 133, a commonsense proposal providing a tax credit to small businesses (2 to 50 employees) offering health benefits through an Individual Coverage Health Reimbursement Arrangement, or ICHRA. The bill now sits with the Ohio Senate. It’s time for state senators to follow the lead of the Ohio House and pass this legislation. It’s pro-business, pro-worker and pro-access to care.
ICHRA is a smart, flexible approach to health coverage that works for both employers and employees. HB 133 will help more Ohio businesses take advantage of it.
What Is ICHRA?
Under an Individual Coverage Health Reimbursement Arrangement, employers contribute a set, tax-free amount toward some or all of the premiums employees pay for health insurance they buy on their own. Instead of offering a single group health plan, employers empower workers to choose from dozens of plans in the Affordable Care Act (ACA) marketplace so they can get the personalized coverage that best fits their needs.
This model represents a fundamental shift in employer-sponsored coverage. Rather than a one-size-fits-all health plan, ICHRA puts individual choice and affordability for individuals as well as predictability for businesses at the center of the system.
Beyond choice and affordability, ICHRA delivers value for members and employees. Condition-focused plans in the marketplace can save members up to $800 a year,* while they manage their diabetes, COPD/asthma, cardiovascular-kidney-metabolic syndrome, or menopause symptoms. This will help bring more people under ACA coverage, strengthening and stabilizing the individual market.
Real Choice for Employees, Predictable Costs for Employers
Employees are not all the same, and neither are their health care needs. A young worker just starting a career may prioritize lower premiums, while a parent may need access to specific doctors and specialists. Under a traditional group plan, those differences can’t always be addressed.
ICHRA changes that. Employees select a health plan tailored to their unique circumstances, whether that means choosing a specific doctor, managing a chronic condition or balancing coverage with household budgets. The employer’s contribution is portable and tax-free, helping employees pay health insurance premiums without increasing their taxable income. This flexibility drives greater employee satisfaction, stronger retention and a workforce empowered to make the best choice for their needs.
For employers, especially small businesses, cost volatility is one of the biggest barriers to offering health benefits. Premium increases, renewal uncertainty and administrative burdens can make it impossible to offer traditional group coverage. With ICHRA, employers decide how much they want to contribute, so they can budget with confidence.
Equally important, ICHRA significantly reduces administrative costs, complexity and risks. Employers no longer need to manage plan selection, renewals or ongoing negotiations. And the individual market allows employers to spread their risk over a larger population, protecting themselves and their employees from high-cost health events. Bottom line, ICHRA saves businesses time and money.
Why HB 133 Matters
House Bill 133 unlocks the value of ICHRAs by offering tax credits to small employers that adopt this approach. It incentivizes businesses that want to offer health insurance to their employees but have been prevented by costs from doing so.
At a time when small businesses face workforce shortages, inflationary pressures and rising costs, this legislation provides targeted, practical relief.
ICHRA is not a theoretical concept. It’s already working in Ohio and across the country. HB 133 will accelerate these benefits here in Ohio. It is a solution worth delivering to our small business community now.
Source:
*Savings are based on an ACA Oscar Health condition-focused plan with a CSR 150.
