An allowance is only useful if employees can buy a plan with real network access where they live and work.
Individual plan carriers and networks vary by county. Checking what is actually available near each plant, store or office tells you whether the allowance buys real choices.
What to check for each location.
Carriers by County
List which carriers sell individual plans in each county where employees live or work.
Networks
Check whether the main hospitals and clinics near each location are in network on the plans available.
Cost by Plan Level
Compare bronze, silver and gold premiums by area so you know what the allowance buys.
Rural and Border Areas
Employees in rural or border counties may have fewer carriers. Flag those locations early.
Employees Who Live Far Away
Employees who live outside the worksite county may shop in a different market. Decide how to handle them.
Review Each Year
Carriers and networks change every year. Recheck before each notice.
Auditing Plan Options at Each Worksite
An allowance is only useful if employees can buy something with it where they work. The audit takes an hour per worksite and should be done before the allowance is set.
What the rules fix for you
For a rating-area class, the employees in a class are those whose primary site of employment is in the same rating area. Michigan has 16 geographic rating areas, labeled A through P, each made up of whole counties. The coverage an employee buys must be individual health insurance coverage. It cannot be short-term limited-duration insurance, and it cannot consist solely of excepted benefits such as stand-alone dental or vision.
Sources: 26 CFR 54.9802-4(c)(6)(ii)(A) and (d)(2), and the Michigan Department of Insurance and Financial Services geographic rating areas. The state document we reviewed carries 2014 and 2015 effective dates, so confirm the current county list before relying on it.
The worksite audit
| What to record | Why it matters |
|---|---|
| Primary worksite and its rating area | Sets the class and the plan market the employee shops in |
| Carriers selling individual plans in that county | Not every carrier sells in every county |
| Lowest-cost silver self-only premium | The measure used for the affordability test |
| Whether the employees’ current doctors and hospitals are in the plans | The reason employees decline or struggle with an allowance |
| Premiums for the youngest and oldest employees | Premiums rise with age, and the allowance may vary by age within the limits |
Source: 26 CFR 54.9802-4(c) for the permitted variation by age and dependents.
An illustration with three worksites
| Worksite | Illustrative lowest-cost silver, self-only | Allowance | Allowance less premium |
|---|---|---|---|
| Worksite 1 | $430 | $500 | $70 |
| Worksite 2 | $520 | $500 | ($20) |
| Worksite 3 | $610 | $500 | ($110) |
Illustrative figures. A single flat allowance leaves employees at worksites 2 and 3 short. A rating-area class would let the employer set a different allowance for each area, because employees in different rating areas are in different classes.
The questions employers ask about plan options by location.
Do all employees have the same plans?
No. Plans available depend on where the employee lives, so options differ by county.
Does the market follow where they live or work?
The class and affordability rules look at the worksite, but employees buy plans in the market where they live, so check both.
What if few carriers are available?
Flag the location early. A higher allowance or a different design may fit better.
Can I recommend a plan?
We can help employees compare plans, but the employer cannot require a particular one.
How do I check networks?
We review carrier directories for the main hospitals and clinics near each location.
Do plans change every year?
Yes. Carriers, premiums and networks change at each plan year.
Does this matter for manufacturers with several plants?
Yes. Our manufacturing page covers multi-plant rating areas.
General information about individual coverage HRAs, not legal or tax advice. Plan-specific questions belong with ERISA counsel and your tax advisor, and we will bring them in.
Where these details come from.
This page summarizes public guidance reviewed in October 2026. Rules change, so confirm current requirements with counsel.
CMS: Individual Coverage HRAs →
U.S. Department of Labor: Employee Benefits Security Administration →
More ICHRA questions and the industries they affect.
Rating Area by Worksite
Which rating area governs each employee.
Employee Enrollment Help
How employees compare and enroll in coverage.
Affordability by Class
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ICHRA for Local Service Businesses
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