This Open Enrollment, Will Enterprises Finally Embrace the Individual Market?

Editor's note: Posts published on From the Workplace are written by outside contributors and do not necessarily reflect the view or opinion of SHRM.

In just a few months, open enrollment will begin for health insurance plans on the Affordable Care Act (ACA) marketplace. 

We tend to think about individual buyers when we think about the marketplace’s open enrollment — those who don’t get their health insurance through a group plan from their employer. But over the past few years, open enrollment has become just as important for employees at companies that offer health reimbursement arrangements (HRA) rather than traditional group coverage. The individual coverage HRA (ICHRA) allows employers to provide an allowance for their employees to purchase health insurance on the individual market, placing them in the same pool as the millions of Americans who purchase individual coverage in the ACA marketplace. 

The number of employers taking advantage of ICHRA is growing. According to recent data from the HRA Council, the number of large employers (defined as those with 50 or more enrolled employees) offering ICHRA increased by an average of 34% between 2024 and 2025. However, growth is slightly more modest for the largest employers surveyed — 31% over the same period for those with 200 or more enrolled employees. Large enterprises — those with thousands of employees across the country — have been slower to embrace the new health insurance model. 

However, there are recent signals that enterprises may be more willing to embrace the individual market. Here’s why enterprises have been hesitant so far, what they stand to gain from HRAs, and what employees should consider if their employer makes the change. 

Why Enterprises Have Been Slow to Move On From Group Plans 

No one ever said that health insurance was simple. 

For large enterprises, providing health benefits is particularly complex. Many enterprises employ thousands of employees across multiple states, managing multiple group insurance plans with important differences and requirements in each location. Health benefits are also extremely personal: a change in coverage could mean that employees can no longer visit the family doctors and specialists that are most important to them. Despite the advantages offered by HRAs, it’s understandable that HR and people leaders are hesitant to move on from a group plan. 

And while group insurance plans can be problematic for smaller businesses — particularly when renewal rate increases cause costs to skyrocket — those issues aren’t quite as pressing for enterprises. A company with thousands of employees will inherently have a larger risk pool, which reduces the likelihood that high usage or low enrollment leads to a drastic renewal increase.  

But while large renewal increases are less likely, they’re not out of the question entirely. According to a recent survey from Mercer, 67% of CFOs cite the cost of health benefits as a significant or very significant concern compared to other operating expenses. Group health insurance is an unpredictable line item on each year’s budget — a double-digit renewal rate increase could wreak havoc on an enterprise’s financial plans. With HRAs, the cost of health insurance is fixed: the employer can choose to maintain the same level of allowance for each employee year-over-year. 

Controlling Costs and Empowering Employees 

For employers, the primary benefit of switching to an individual coverage HRA is undeniable. Setting a fixed cost for health insurance, one of every enterprise’s largest cost centers, offers significant advantages for long-term financial planning. ICHRA also simplifies management for enterprises with employees located in multiple states: rather than managing complicated multistate group plans, each employee can easily find coverage in their local area. 

But ICHRA plans aren’t just a matter of cost control. ICHRA offers a new solution to a long-standing question: why are employers making health care decisions on behalf of their employees? There are few things more personal than our health, and the individual needs of an enterprise’s employees can vary wildly. Even with two or three available group plans, most employees will have to compromise when it comes to finding the right coverage for themselves and their families. 

With ICHRA, employees suddenly become consumers on the individual market — able to conduct research and make choices in the same way they would choose housing or a car. Employees can choose what they want to prioritize in their ACA plan, whether that’s cost savings, specific in-network doctors, or flexible spending options.  

Enterprises that switch now to ICHRA will be joining a program that continues to improve: as more organizations embrace the individual market, the available plans will improve as costs are spread across a growing risk pool. According to platform data on enterprise use from Take Command, the average enterprise saves 19% per year when switching to ICHRA; the average actual savings per enterprise during the first year is more than $1.4 million. 

Making changes to employee benefit packages will always be a heavy decision, and enterprises need to understand the details of the transition before switching away from their existing group plan. For many employees, switching to ICHRA will mean choosing their health insurance plan for the first time in their lives; employers must be ready to provide education and support to ensure every employee finds the coverage they need. But enterprises that choose to embrace ICHRA before the next open enrollment period will reap considerable benefits — in an uncertain economy, locking in controllable health insurance costs could prove to be extremely valuable. 

Jack Hooper is the CEO and co-founder of Take Command and former chairman and founding member of the board for the HRA Council.