Health insurance has always come with the job for most Americans. You get hired, your employer picks a plan, and it covers a big chunk of the bill.
That model is cracking. More companies are leaving group insurance behind and instead giving workers money to buy their own plans. These deals are called health reimbursement arrangements, or HRAs.
The pressure is financial. Mercer projects per-employee health expenses will hit $18,500 this year, a 6.7% increase from 2025 and the largest rise in 15 years, while ACA marketplace premiums climbed about 20% last year after Congress let Covid-era subsidies expire.
The rules changed in 2020. Before then, only small businesses could offer HRAs. A newer version called an ICHRA opened the door for employers of all sizes.
That version is catching on. According to the HRA Council, more than 20,000 firms adopted HRAs in 2026, a 53% jump.
ICHRAs now cover an estimated 350,000 to 700,000 families. Even with that growth, the program is still a small slice next to the 160 million Americans who get coverage through work.
Under an HRA, the employer sets the money and the worker does the shopping. You pick a plan through the ACA marketplace or another exchange, and the company's contribution pays for it.
If the plan costs less than the allowance, the extra money can go toward other medical care. According to the HRA Council, about 20% of employees discovered a policy priced below what their company provided.
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The numbers show how closely the math is matched. The HRA Council reports that the typical ICHRA enrollee got $459 per month from their employer and paid $567 for their monthly premium in 2026.
Supporters say the shift gives people real control. "It's putting the employees' health and wealth and wellbeing into their own hands," says Robin Paoli, executive director of the HRA Council.
It also comes with trade-offs. Individual plans generally carry higher deductibles and narrower doctor and hospital networks than employer-sponsored group plans, according to Georgetown University's Center on Health Insurance Reforms.
TURN Community Services, a nonprofit in Utah, hit that wall four years ago. Its insurer proposed a 19% rate increase.
HR director Brenda Harris says the choice was stark: "It was, 'do we close our doors? Do we make everyone a part-time employee and not offer benefits, or do we go with the ICHRA?'"
"Getting everybody's head wrapped around that took a minute, though employees loved it," Harris says.
The organization chose the ICHRA. The organization now cuts its health-benefit spending by roughly half a million dollars annually, with roughly 200 employees enrolled.
Employees also have lower monthly out-of-pocket costs. But the market pushed back: double-digit premium hikes on marketplace plans last year reduced those savings.
The switch to an HRA is not a small change for employees. It turns you from a passenger into a shopper.
The employer still pays, but the worker makes the call.
The shopping experience depends on where you live. Some counties have more than a dozen insurers on the marketplace, while others have only one.
A choice-friendly market can make an HRA feel like freedom; a one-insurer county can make it feel like a downgrade.
Whether this shift lands well for any one family comes down to the details. The allowance, the local plan prices, and the size of the doctor network all matter.
That's a lot more homework than the old way, and the rewards, when they show up, are the kind you can spend on medical care.
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