Inside the Tech Infrastructure That's Driving Next Phase of ICHRA Maturity

While the fast growth of the Individual Coverage Health Reimbursement Arrangement is putting choice back into the hands of employees, it's also creating a significant operational challenge. With roughly 45 benefits platforms and 140 ACA carriers all needing to communicate, the ecosystem requires thousands of potential connections for every function, from quoting to policy management. This tangled web of direct integrations creates a technical and administrative mess, suggesting that the next phase of market maturity will be defined not by another consumer-facing app, but by streamlining the foundational infrastructure that manages these connections.

To break down what's going on under the hood of the ICHRA model, we spoke with Michael Levin, the Senior Vice President of ICHRA at HealthSherpa. Levin is a serial entrepreneur with a history of scaling companies in the insurance technology sector, giving him a nuanced viewpoint on the structural challenges and opportunities within the ICHRA market today. He explains that one of the fundamental challenges with ICHRA is that its administrative burden increases directly with the number of individual employees, which is a departure from the group-based model.

"In a traditional group health plan for a 100-person company, there are typically only one or two plan choices. In the world of ICHRA, that same company could have 100 unique employee enrollments," he says. "The administrative work scales with the number of employees, not the number of groups."

Levin’s perspective is that the industry should focus on preventing this complexity, not sorting through it after the fact. He sees ICHRA's relative youth as a key opportunity to establish a more seamless structure while the model is in its early stages, avoiding the technical debt that plagues the group benefits space. "The goal isn't to fix a mess later. It's to prevent it from ever occurring, and we can do that by building the right infrastructure from the ground up," he says.

• Untangling the web: HealthSherpa achieves this through a suite of infrastructure and APIs that remove the need for a tangled web of direct connections. "We are a one-to-many partner for both carriers and ICHRA platforms, giving each access to the other and abstracting away the complexities of the other side."

• Group-like efficiency: Levin explains that group health insurance offers an element of simplicity many are accustomed to. His goal is to enable a similarly straightforward, efficient experience in the ICHRA model. "My guiding light is thinking about what we need to build to enable group-like experiences for employers and employees, and operational and financial efficiencies for brokers, ICHRA platforms, and even the carriers themselves."

According to Levin, the initial operational overload of ICHRA caught many partners by surprise, leading to less-than-stellar user experiences. Some responded by trying to build their own connections, a move he views as a strategic misstep. "It's a misuse of a platform's venture capital to rebuild carrier connectivity that is already available to their competitors at no cost. Those dollars are better spent on go-to-market strategies that build the market."

• The employee payoff: It's an approach, he says, that's already paying off for firms in the form of enhanced resources for employees. "Because of what we're building, we're starting to see our partners shift where they're spending their money and spend more on the employee experience, building better decision support to help employees select the right plan based on their circumstances."

According to HealthSherpa's ICHRA enrollment modeling, the market grew by 2.8x last year and is on track to cross the million-member mark in 2026, signaling strong momentum. "Two new ICHRA platforms have already popped up this year to date," Levin says. He predicts the growth will likely continue for another couple of years, but that market’s state will be one of sustained fragmentation. This, he says, is a sign of a healthy ecosystem. "This is not a winner-take-all space. It's not even a winner-take-few space. This is going to be a highly fragmented space based on differing needs of channel, of functionality, and of employers."