ICHRA 101
ICHRA (CHOICE Arrangement) gives employers a different way to offer health benefits. Instead of selecting one group plan for everyone, the company sets a monthly allowance, and employees use it toward eligible individual coverage that fits their needs.
Employers get budget control
Employees get more choice
Lirvion keeps the program organized, documented, and easier to manage
What is an ICHRA?
An Individual Coverage Health Reimbursement Arrangement, or ICHRA, is an employer-funded health benefit that can reimburse employees for eligible individual insurance premiums and certain qualified medical expenses.
The employer does not have to pick one carrier or one plan for the whole company. Instead, the employer creates allowance rules, and eligible employees choose coverage based on their own doctors, prescriptions, household needs, and location.
How ICHRA works
01
Program setup
Employee eligibility, class structure, allowance amounts, and plan-year rules are configured inside Lirvion
02
Allowance
The employer defines a monthly reimbursement amount for each eligible class, with clear limits for what can be reimbursed during the plan year
03
Employee enrollment
Employees select eligible individual coverage through supported enrollment paths, including Marketplace plans, private options, or Medicare when applicable
04
Verification & reimbursement
Premiums and eligible expenses are reviewed against the employer’s ICHRA rules before reimbursement is approved
05
Compliance records
Required notices, eligibility history, reimbursement activity, safe harbor elections, and audit-ready records are maintained inside the platform
Why not just give employees a raise?
A raise may seem simpler, but it does not work the same way as a structured health benefit
Wages are paid through payroll and can be used for anything. They do not give the employer a structured way to confirm whether the money was used for qualifying individual health coverage.
With an ICHRA, the employer sets a defined monthly allowance that stays connected to health coverage. Employees must maintain qualifying individual coverage and follow the program’s documentation requirements before allowance amounts can be applied under the ICHRA.
This keeps the benefit tied to coverage, records, and plan rules — not just another line item in payroll.
Why do employers choose ICHRA?
Budget control without group-plan pressure
Employers set defined monthly allowances instead of waiting for unpredictable group renewal increases
Flexible benefit design
Employers can structure different allowance strategies for legally recognized employee classes
Coverage that fits the employee
Employees can choose plans around their doctors, prescriptions, family needs, and where they live
Administration without the spreadsheet chase
Notices, eligibility, reimbursements, and records are tracked inside Lirvion — without disconnected spreadsheets or constant manual follow-ups
Monthly Allowance by Class
- Full-time$1,450/mo
- Part-time$925/mo
- Seasonal$1,080/mo
- Temporary$420/mo
Customize allowances by employee class
ICHRA gives employers flexibility to design benefits around different workforce groups while staying within a structured compliance framework.
Allowance amounts may vary across legally recognized employee classes, such as full-time, part-time, salaried, hourly, seasonal, geographic location, or employees covered by a collective bargaining agreement. Within each class, the program should be administered consistently under the plan rules. Allowances may also be adjusted by age or family size when permitted.
Terminology Update — September 2026
Meet CHOICE Arrangements
As of September 2026, CMS uses CHOICE Arrangement in its employer-facing materials for what has been known as an Individual Coverage Health Reimbursement Arrangement (ICHRA). CHOICE stands for Custom Health Option and Individual Care Expense Arrangement.
The model described throughout this guide remains familiar: employers define allowances, and eligible employees choose individual health coverage that fits their needs. For employers, CHOICE puts the focus where it belongs — greater employee choice and greater control over the benefits strategy.
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