Manufacturers run shifts, plants and bargaining units. An ICHRA lets each group have its own allowance instead of one plan for all.
A manufacturer using an individual coverage HRA can give salaried office staff, hourly production workers and union employees different allowances, with variation by plant location if desired. The effort goes into class design, picking the right market near each plant and working out affordability.
Why manufacturers look at an ICHRA.
Salaried and Hourly Classes
Salaried and hourly workers are permitted classes, so engineers and office employees can receive one allowance and production workers another, provided everyone in a class is treated identically.
Each Plant Is Its Own Rating Area
Individual premiums differ from county to county, and allowances can follow rating areas, so a plant in an expensive area need not be priced like a plant in a cheap one.
Union Employees Can Be a Separate Class
A class can be made up of employees under a collective bargaining agreement, which lets a plant leave bargaining-unit employees on the negotiated plan. Read the agreement before deciding.
Seasonal Production Gets a Known Cost
Seasonal employees may be placed in their own class. A set allowance gives the employer a predictable cost when production headcount peaks.
A Waiting Period for New Hires
A waiting period of up to 90 days is available to the employer and can line up with a probationary period on the plant floor.
A Different Option from Group Health
Not every manufacturer is a good candidate for an ICHRA, so we set it next to the group plan and compare them directly.
The manufacturing issues that decide whether it works.
Affordability for Larger Employers
A manufacturer with 50 or more full-time equivalent employees has to provide an allowance that is affordable. Check each class, the lowest-paid shift included.
Bargaining Agreements
If a collective bargaining agreement covers health benefits, the terms may limit what you can change. Review the agreement with counsel before designing classes.
Plan Choice Near the Plant
Individual market choices vary by county. Check which carriers and plans are available near each plant before you commit to an allowance.
Employee Shopping Experience
Many production workers have never purchased individual coverage, and the quality of enrollment support affects how many sign up.
Notice and Timing
The ICHRA notice must reach employees 90 or more days ahead of the plan year, which means planning has to begin well before the renewal date.
Variable-Hour Employees
Overtime and changes in shifts can shift who qualifies as full-time under the ACA, so go over your measurement method with counsel.
What to settle before moving plants to an ICHRA.
Which employees are covered by an agreement?
List every bargaining agreement before drawing class lines.
Which plan options exist near each plant?
Check carriers and networks in each county.
What does peak headcount cost?
Model both peak and off-peak production instead of relying on one average.
Who helps employees buy a plan?
Schedule enrollment support for the period before the notice goes out.
Does every class pass affordability?
With 50 or more full-time equivalents, each class has to be tested.
Is the group plan still the better answer?
Put the two options next to each other before choosing.
The questions manufacturing employers ask about ICHRAs.
Can a manufacturer offer different allowances to salaried and hourly staff?
Yes. Salaried and hourly are both permitted classes and all employees in one class are treated alike. Counsel should check the definitions.
What happens to union employees?
Employees covered by a collective bargaining agreement can be placed in their own class. The agreement itself controls what is allowed, so review it first.
Can the allowance vary by plant?
Within a class, allowances can differ by rating area depending on where each person works, provided the rule is documented and followed every time.
Does an ICHRA work for a manufacturer with 50 or more employees?
It can, so long as the allowance clears the ACA affordability test for that year; model each class. The affordability percentage for 2027 is 10.22%.
What if there are few plan choices near a plant?
Individual market options vary by county. Check carriers and networks near each plant before you decide, and compare with the group plan.
How early do we need to start?
The ICHRA notice must be received at least 90 days before the plan year starts, and employees need time to compare plans, so plan far ahead.
What notices do we still send?
The ICHRA notice is one of several; other compliance notices can still apply. Our employee notices page has the list.
This is background on individual coverage HRAs and not legal or tax advice. Questions about a specific plan should go to ERISA counsel and your tax advisor, and we will involve them.
Where these details come from.
Reflects public guidance reviewed in October 2026. Requirements change, so verify them with counsel. Federal agencies have also begun calling ICHRAs CHOICE Arrangements; the rules are unchanged.
CMS: Individual Coverage HRAs →
U.S. Department of Labor: Employee Benefits Security Administration →
More ICHRA guides for other workforces.
ICHRA for Construction and Skilled Trades
Union carve-outs and mobile crews.
ICHRA for Trucking and Logistics
Drivers, owner-operators and dispatch.
ICHRA for Defense Contractors
Federal contract requirements and billing rates.
ICHRA for Technology Companies
Salaried teams, remote hires and contractors.
ICHRA for Staffing Agencies
Internal staff and placed employees.
ICHRA by Industry
Compare all seventeen workforces side by side.
Send us your renewal.
You get our view on whether the renewal looks competitive, where we spot room to improve, and five questions to raise with your carrier. It costs nothing and you are not obligated to switch anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents, or six when your group has 50 or more employees. We ask for nothing beyond that, since each extra item is just another reason to delay.
An independent employee benefits consulting firm. We look at the entire benefits program: cost, plan performance, risk and administration.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →
Cookies on This Site
This site uses cookies so it works as it should and so we can see how it gets used. Anything that is not essential can be declined. Full details are in our Privacy Policy for the detail.
- Essential — required for pages to load and for navigation to work. These stay on.
- Analytics — show us which pages people read, which tells us where to write next.
- Advertising — placed by outside parties such as advertising and social networks to measure and target campaigns.