ICHRAs projected to quadruple by 2029 as states offer tax incentives
Individual coverage health reimbursement arrangements, now rebranded as CHOICE arrangements, are expected to grow from about 500,000 members to 2.5 million by 2029, according to Oscar Health's CEO. Several states are enacting laws to encourage adoption, including tax credits for employers. Meanwhile, a new study shows self-funded employers are facing high costs from the No Surprises Act arbitration process, with nearly 90% of decisions favoring providers.
The rebranding of ICHRAs as CHOICE arrangements coincides with state-level incentives, including tax credits for employers in at least three states. Oscar Health’s projection of 2.5 million members by 2029 reflects growing interest among small and mid-size employers, many of whom are weighing dropping traditional group plans due to double-digit premium increases. Separately, the No Surprises Act’s arbitration process is straining self-funded employers, with one plan sponsor seeing arbitration-related payments jump from $3.5 million in 2025 to over $6 million in just the first half of 2026. Another employer estimates these payments could represent 5–6% of total healthcare spending this year.
The shift toward CHOICE arrangements and away from traditional group coverage may reshape how millions of Americans access insurance, potentially increasing out-of-pocket variability and administrative complexity. Employers facing arbitration costs and premium hikes could pass expenses to workers or reduce benefits, while medical debt remains widespread even among the privately insured. These trends could accelerate fragmentation in the healthcare market, leaving consumers to navigate more choices with less employer support.