Individual coverage HRA allowances need a fresh look for 2027.
An individual coverage HRA (ICHRA) lets an employer reimburse employees for premiums they pay for individual-market coverage. The employer sets the allowance, so when marketplace premiums rise about 13% on HealthCare.gov, as KFF estimates, a fixed allowance covers less of the bill.
The rules that govern ICHRAs are at 26 CFR §54.9802-4, and the choices you make about classes and allowances carry compliance consequences. Send us your renewal and we will give you a second opinion in writing.
Three points to settle before you announce 2027 allowances.
Fixed dollars buy less
Compare each class’s allowance with 2027 premiums for your employees’ ages and counties. DIFS says HealthCare.gov window shopping is open, so you can look at real 2027 prices without entering personal details.
Classes and notice
The rule lets an employer define classes of employees, for example full-time and part-time or by rating area, and vary the allowance between them within limits. Employees must receive written notice before the plan year begins; for a calendar-year plan the 90-day deadline for 2027 was early October.
Affordability is tested against the marketplace
For an applicable large employer, an ICHRA offer is measured against the lowest-cost silver plan in the employee’s rating area, so rising marketplace prices matter more here than under a group plan. Ask your adviser to run the test for each class.
Keep reading.
HealthCare.gov premiums rise again in 2027
What the 2027 marketplace increases mean for an employer plan. Back to the marketplace page.
Keep reading on 2027 marketplace premiums.
Where these figures and rules come from.
Figures and rules
Individual coverage HRA rules: 26 CFR §54.9802-4. Employer shared responsibility: Internal Revenue Code §4980H. DIFS, Open enrollment is coming (October 26, 2026). KFF and The Hill: KFF estimates about 13% for HealthCare.gov in 2027, as reported by The Hill on October 31, 2026; KFF’s review of insurer filings found a median proposed increase of 15% (KFF, How Much and Why ACA Marketplace Premiums Are Going Up in 2027). This page is general information, not legal or tax advice.
Send us your renewal.
Four documents — the renewal letter, the plan summary, the contribution split by tier and enrolled counts by tier. We’ll come back with a competitive read, where we see opportunity, and the five questions we’d put to your carrier.
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