How many employers offer ICHRA (now CHOICE arrangements)? In 2026 the honest answer is fewer than the enthusiasm suggests and far more than last year. About 11% of employers that offer no health benefits fund individual-market coverage for their workers, along with 4% of employers that do offer a group plan. A separate industry report released this year put adoption growth above 50% year over year. Both findings are accurate, and reading them together is the only way to see where this market actually sits.
How many employers offer ICHRA in 2026?
In KFF’s 2026 Employer Health Benefits Survey, about 11% of employers that do not offer health benefits provide funds for individual-market coverage, along with 4% of employers that do offer a group plan. KFF’s news release framed the finding under the heading “Few employers help workers buy ACA coverage.” The survey covers 1,937 firms with ten or more workers.
An important point: the 11% is not 11% of all employers, but only describes employers with no group plan at all. This is exactly the population ICHRA was built to reach. We’re seeing a small penetration into the ideal market for these plans. The reality is that at 11%, the total addressable market (TAM) for CHOICE plans is a green field. Growth is a given.
If penetration is that low, why does every report say ICHRA is growing fast?
Because both things are true at once. The HRA Council counted more than 20,000 businesses offering an ICHRA or QSEHRA in 2026, covering upward of 500,000 lives, roughly double the prior year. Rapid growth from a small base still leaves a small base. KFF is measuring penetration. The HRA Council is measuring velocity.
Which employers are actually adopting?
Two main employer groups are adopting ICHRA for entirely different reasons.
The first is small employers who never offered coverage at all. More than two-thirds of small businesses that added an ICHRA in 2026 had never offered health benefits before, which lines up with KFF’s 11% almost exactly.
The second group surprises people. Employers with 1,000 or more employees grew ICHRA adoption 178% year over year, and the 500 to 999 segment grew 109%. Applicable large employers are now the fastest-growing slice of a product most brokers still describe as a small-group play.
That growth rate deserves a bound next to it. Percentage growth off a small base looks like a market shift, while absolute composition tells you where the market actually sits, and the market remains overwhelmingly small-employer and overwhelmingly first-time. Both facts hold at once.
Why is small-employer adoption concentrated among firms that offered nothing?
Cost explains most of it. KFF found that covered workers at firms with 10 to 199 workers contribute $9,687 a year toward family coverage, $2,847 more than workers at firms with 200 or more. Their deductibles run higher too, and a third of them are in a plan where the worker pays more than half the family premium. For an employer who has never offered a plan, the first group quote arrives with that deficit inside.
| 2026 employee cost | 10-199 workers | 200+ workers |
|---|---|---|
| Annual worker contribution, family coverage | $9,687 | $6,840 |
| Average single deductible | $2,624 | $1,772 |
| Share paying over half the family premium | 32% | 6% |
Market awareness explains most of the other adopters. The 2026 EBRI and Morgan Health employer ICHRA survey polled 984 benefits decision-makers and found awareness lowest among exactly the employers with the most to gain: small firms that currently offer nothing. The same survey found 77% of employers would be more likely to adopt an ICHRA if their broker recommended it, and 89% said they’d be on board if they could count on group-plan network quality. We’re seeing state-by-state movement on the second. The first is entirely up to brokers themselves.
What should brokers do with these numbers?
Treat the data as a qualification filter rather than a prompt to pitch. The situations where the case is strongest:
- Employers who currently offer nothing, where the comparison is against zero rather than against a plan people already like
- Small groups facing a renewal the employer has already said out loud they cannot absorb
- Larger employers with scattered workforces, where a single network never fit the geography to begin with
And the situation where it is usually the wrong answer: a stable renewal, a satisfied workforce, and no appetite for change. Across 250 implementations we’ve run, the groups that were most satisfied were the ones who really needed a better answer.
What the 2026 numbers do not show
Two caveats worth carrying into any client conversation.
KFF counts employers providing funds for individual-market coverage generally, which includes QSEHRA and similar arrangements rather than ICHRA alone. The HRA Council draws on 17 member platforms rather than the whole market, which the Council estimates covers 75% to 80% of activity.
The larger caveat is the market underneath. Individual-market enrollment contracted sharply in the year ending June 30, 2026. ICHRA is growing on top of a pool that is shrinking, which is an unusual position and one no report has fully explained yet. It is also why the policy picture heading into 2027 matters more than adoption counts alone.
Frequently asked questions
Is ICHRA replacing group health insurance?
No. At 4% penetration among employers that offer benefits, ICHRA is not displacing group coverage at scale. Growth is concentrated among employers who previously offered nothing and among large employers running it alongside or in place of existing plans.
How many people are covered by an ICHRA?
The HRA Council substantiated more than 500,000 ICHRA-covered lives as of January 2026, roughly double the 250,000 it confirmed a year earlier. The Council notes its data represents an estimated 75% to 80% of market activity, so the true figure is likely higher.
Is ICHRA only for employers who never offered coverage?
No, though that is where small-employer adoption clusters. Nearly a third of small employers who adopted an ICHRA in 2026 moved over from the small group market, and large-employer adoption is growing faster than either.
Where this leaves your book
If you have a group where the renewal math stopped working, send us the census. We will run a free cost savings analysis and tell you plainly whether ICHRA fits, including the cases where it doesn’t.
Ready to talk through ICHRA opportunities for your book of business? Let’s connect.
— Andy Stein, Founder & President, The Worksite Group
