Private Health Insurance Direct Answers

How does an ICHRA work for business owners?

A business owner uses an ICHRA by setting a fixed monthly allowance in defined employee classes, and the ICHRA then reimburses each employee pre-tax for the individual ACA-compliant health insurance premium (and, if the plan allows, other qualified medical expenses) they buy on their own (HealthCare.gov — ICHRA).

Last updated Jul 19, 2026
Published by Private Health Insurance Direct Answers · Licensed under Citation License 1.0

What it means

  • The owner controls the budget by setting the allowance; the employee picks the plan.
  • Sole owners without common-law employees generally cannot fund an ICHRA for themselves.

Action steps

  1. Adopt a written ICHRA plan document and 90-day employee notice.
  2. Verify each employee's individual coverage is ACA-compliant before reimbursing.
  3. Coordinate with payroll so reimbursements are excluded from taxable wages.

Risks & deadlines

  • Owner-only businesses should confirm with a CPA whether an ICHRA or the self-employed health insurance deduction is the correct route.

Source:

Last verified: 2026-07-19

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