ICHRA enrollment nearly triples as Americans shift to 'cash-for-coverage' plans

ACA cost clarity is restoring shoppers' cash as king.

Individual Coverage Health Reimbursement Arrangements originally allowed employers to offer employees a monthly allowance of tax-free money to buy individual health coverage within the ACA/Obamacare marketplace.

According to HealthSherpa, that is shifting to off-exchange plans.

Bold font is mine.

https://www.benefitspro.com/2026/01/21/ichra-enrollment-nearly-triples-as-americans-shift-to-cash-for-coverage-plans/

ICHRA enrollment nearly triples as Americans shift to 'cash-for-coverage' plans

By Allison Bell    |    January 21, 2026 

What You Need To Know

• HealthSherpa helps agents and brokers make individual health coverage sales.
• Michael Levin thinks firm stats show the 2026 ICHRA market is 2.8 times bigger than the 2025 ICHRA market.
• He estimates that translates into total, nationwide ICHRA enrollment of 400,000 to 800,000.

Roughly 400,000 to 800,000 U.S. residents might be using cash from individual coverage health reimbursement arrangements or similar arrangements to pay for their health insurance this year.

The number of people using ICHRA plans to pay for coverage may now be 2.8 times higher than it was a year ago.

Michael Levin, a senior vice president at HealthSherpa, posted those ICHRA market size estimates on LinkedIn in an analysis based on HealthSherpa's own transaction data.

HealthSherpa analysts believe there are early signs that the number of people using ICHRA plans or a similar type of plan, the qualified small employer health reimbursement arrangement, to buy coverage could triple again in 2027.

"Some will argue these numbers are too high," Levin wrote. "Others will argue the market is larger."

Related: ICHRA users favor bronze plans as enrollment begins

When more insurers and ICHRA program managers post their numbers, or send their numbers to the HRA Council for use in the council's annual reports, HealthSherpa will use the new data to improve its own estimates, Levin said.

What it means: The U.S. employer cash-for-coverage plan market may already be generating a significant number of policy sales.

Issuers of individual disability insurance, for example, sold about 283,000 new policies in 2024, according to Gen Re survey data.

HealthSherpa: HealthSherpa helps agents and brokers sign people up for individual and family coverage and for Medicare coverage. It supported about one-third of Affordable Care Act exchange plan enrollments in 2025.

The open enrollment period for 2026 ACA exchange plan coverage ended Jan. 15 in most of the United States.

This year, HealthSherpa has supported sales of about 50,000 policies, for coverage for 73,000 people, for customers coming in through 31 ICHRA program managers.

HealthSherpa used its transaction data and assumptions about how the individual and family coverage market works to come up with the total national ICHRA use count estimates.

The ICHRA market size measurement backdrop: Some other ICHRA watchers have provided much higher ICHRA user counts.

Brad O'Neill, the co-owner of the ICHRA Shop Insurance Agency, estimated in January 2025 that employers could be offering ICHRAs or other cash-for-coverage plans to about 5 million workers and dependents.

Paul Fronstin, an analyst at the Employee Benefit Research Institute, suggested in August 2025 that 300,000 to 700,000 workers and dependents could be using formal cash-for-coverage arrangements.

One possible source of discrepancies between cash-for-coverage plan use estimates is use of informal cash-for-coverage plans.

For an employer, providing cash for coverage outside of an ICHRA plan or a qualified small employer health reimbursement arrangement can cause tax compliance problems and health benefits compliance problems. But the National Federation of Independent Business reported in 2016 that 16% of the small employers it surveyed in 2015 were helping employees pay for individual or family health coverage.

The NFIB survey results suggest that millions of employers may have been offering informal cash-for-coverage plans in 2015.

Affordable Care Act exchange vs. off-exchange: Under the current rules, workers with ICHRA plans can buy coverage through HealthCare.gov or another ACA public exchange without benefiting from the tax exclusion for employer-sponsored health coverage.

Workers with ICHRA accounts and Section 125 cafeteria plans can buy off-exchange coverage with pre-tax earnings.

HealthSherpa supported a mix of on-exchange and off-exchange policy sales to ICHRA users.

Typically, Levin found, the off-exchange coverage shoppers spent about as much as the on-exchange shoppers.

The off-exchange shoppers were more likely to use their access to tax benefits and low off-exchange prices to buy richer coverage than to keep their out-of-pocket costs down, Levin said.

Combined with other data, "this continues to reinforce a broader theme emerging from the data," Levin said. "The future of ICHRA is off-exchange."