There is a product that pays commissions on individual ACA enrollments, that any employer can offer regardless of size, and that most independent brokers still treat as a large group compliance topic. ICHRA, the Individual Coverage Health Reimbursement Arrangement, became available to employers in January 2020. The brokers who sell it well are running ACA quotes on employer groups the same way they run individual quotes, because the underlying plan is an individual plan.
The employer sets a reimbursement amount. Each employee picks their own Marketplace or individual plan. The employer reimburses the premium up to the defined limit, tax-free. That is the entire mechanism. Most of what trips brokers up is the APTC interaction and the affordability test, not the product structure itself.
Key Takeaways
- ICHRA lets any employer reimburse employees for individual health insurance premiums tax-free. No contribution caps, no minimum employer size.
- Employees who accept an affordable ICHRA offer cannot also take APTC. The affordability test determines which path makes more sense for the employee.
- Brokers earn commission on the underlying ACA plans employees enroll in, the same rate as any individual Marketplace enrollment.
- ICHRA differs from QSEHRA in two important ways: ICHRA applies to any employer size, and ICHRA has no annual reimbursement cap.
- An employee who declines an unaffordable ICHRA can still access APTC on the Marketplace. Running the affordability math first is not optional.
How ICHRA changes the employer conversation
A standard small group sale centers on one plan: the employer picks a carrier and network and everyone is enrolled. ICHRA inverts that. The employer decides a dollar amount. Each employee picks the plan that fits their household. A 27 year old employee might take a Bronze ACA plan and keep the difference. A 54 year old with a specific hospital network might pick a Gold PPO. Same ICHRA offer, two different plans.
That flexibility is the pitch to the employer. The broker's job is not to pick the plans. The job is to help each employee run a real quote with their household income, ZIP code, and the ICHRA reimbursement amount factored in. That is an individual ACA quote with a benefit offset, not a group sale.
For small employers who ask how to help 1099 contractors or part-time staff get covered without adding a group policy, ICHRA is almost always the right conversation. The broker gets paid on individual enrollments either way.
The affordability test brokers cannot skip
Employees who accept an ICHRA offer cannot also claim the APTC. That is the rule. But it only applies when the ICHRA is considered “affordable” under the ACA test. An employee at 180% FPL who receives a $50 per month ICHRA from a small employer may still qualify for more in APTC than the ICHRA is worth. If the math favors APTC, the employee can decline the ICHRA and enroll on the Marketplace instead.
The affordability test compares the employee's remaining Silver premium cost, after the ICHRA amount, to a contribution percentage of their household income. CMS publishes this percentage each year alongside the FPL tables. When the remaining premium is below the threshold, the ICHRA is affordable and APTC is blocked. When the remaining premium exceeds the threshold, the ICHRA is unaffordable and the employee can decline it and access APTC instead.
Run this test for every ICHRA employee before the enrollment conversation. The ACA subsidy calculator shows APTC eligibility and benchmark Silver premiums in one pass. That is the starting point for the affordability comparison.
ICHRA vs QSEHRA vs group health
| Topic | ICHRA | QSEHRA | Group health |
|---|---|---|---|
| Employer size | Any size | Fewer than 50 full time equivalents | Any size (ACA mandate at 50+) |
| Annual reimbursement cap | No cap | $6,350 single / $12,800 family (2026 IRS limits) | Employer sets premium contribution |
| Employee plan choice | Employee picks any individual or Marketplace plan | Employee picks any individual or Marketplace plan | Employer selects the plan for everyone |
| APTC interaction | Blocks APTC if ICHRA is affordable under ACA rules | Reduces APTC dollar for dollar | Not applicable, group enrollment channel |
| Broker commission | On the underlying individual ACA plan, carrier rate | On the underlying individual ACA plan, carrier rate | Group commission rate, varies by carrier |
| Available since | January 2020 | January 2017 | Pre-ACA, still most common at 50+ employees |
QSEHRA is the capped predecessor. It is for employers with fewer than 50 full time equivalents and has annual reimbursement ceilings set by IRS. ICHRA removed those caps and extended eligibility to any employer size when it launched in 2020. For most small employer situations, ICHRA is the better structure today. Brokers with legacy QSEHRA clients should revisit whether ICHRA is a cleaner option at renewal.
Where broker commissions come from
The ICHRA itself generates no commission. The commission comes from the individual plan each employee enrolls in. If 14 employees at a 20 person shop each enroll in an ACA Marketplace plan, the broker earns the carrier commission on each of those 14 enrollments, the same as 14 individual client accounts. This is the part of ICHRA that most individual market brokers undervalue when they first hear the pitch from a benefits administrator.
At AEP, those 14 employees are individual renewal clients. They get new plan options for the coming year. The employer may adjust the ICHRA reimbursement amount. The broker re-runs quotes for each employee, checks affordability against the new reimbursement, and updates each person on their options. That is a renewal book built from individual accounts, not a group policy renewal. For how carrier commissions flow on individual enrollments, see how ACA broker commissions work in 2026.
Mistakes brokers make at the ICHRA enrollment
Skipping the affordability test.If the employer's ICHRA amount does not cover enough of the Silver premium, the employee may be better off declining and taking APTC. Most brokers who skip this math do not realize the client was subsidy eligible until the client reads about it somewhere else.
Treating ICHRA as a group enrollment workflow. Quotit and Connecture are built for group benefit administration. An ICHRA quoting workflow runs through the individual plan finder, not a group benefits portal. The enrollment channel is Marketplace or carrier direct, not a group eligibility form.
Not documenting who declined and why. Employees who decline an affordable ICHRA cannot access APTC. That conversation needs to be in writing. If the employee later claims APTC and IRS determines the ICHRA was affordable, the household can face repayment of the advance credit.
Missing effective date timing for mid-year ICHRA starts. ICHRA has a defined plan year, typically aligned with the employer's calendar year. Employees who start mid-year may have a qualifying SEP to enroll in an individual plan. Confirm the SEP trigger and documentation before running the quote.
FAQ
The questions employers and employees bring to brokers once ICHRA is on the table.
Can an employee use ICHRA and APTC at the same time?
No. An employee who accepts an affordable ICHRA offer cannot claim APTC. If the ICHRA is unaffordable under the ACA test, the employee can decline the ICHRA and access APTC instead. The affordability calculation compares the employee's remaining Silver premium cost to their household income.
How do broker commissions work under ICHRA?
Brokers earn commissions on the individual ACA plans employees enroll in, the same as any individual Marketplace enrollment. There is no separate ICHRA commission. The ICHRA is the employer's reimbursement vehicle. The carrier pays on the underlying plan.
What is the ICHRA affordability test?
An ICHRA is considered affordable if the employee's remaining premium for the lowest-cost Silver plan in their rating area, after the ICHRA reimbursement, does not exceed the applicable contribution percentage of their household income. CMS publishes this percentage annually alongside the FPL tables.
Can part-time employees be excluded from ICHRA?
Yes. Employers can define eligibility classes including full time only, seasonal, part time, or by location. Employees in different classes can receive different ICHRA benefit amounts or no ICHRA at all. Brokers advising employers on class definitions should flag that all employees in the same class must receive the same offer.
Is ICHRA available to employers with fewer than 10 employees?
Yes. ICHRA has no minimum employer size requirement. A sole proprietor, a 3 person shop, and a 500 person firm can all offer ICHRA. This is the biggest structural difference from traditional group health, which becomes most cost-effective at scale.
Competitor data verified June 2026. Vendors update features and pricing without notice — confirm directly with each vendor before purchasing decisions. Quotit and Connecture are trademarks of their respective owners. QuoteTurbo is not affiliated with or endorsed by any of them.
