Why Vendor Evaluation Often Hinges On Subject-Matter Expertise in the Maturing ICHRA Market

The market for ICHRA administrators has exploded, growing from a handful of providers when the model was first established to more than 40 today. While that growth signals ICHRA's maturation from a policy experiment to a mainstream benefits strategy, it also creates a new challenge for brokers and employers. As adoption increases, driven by employers seeking alternatives to the rising costs of traditional plans, industry leaders are recognizing that success depends less on flashy features and more on deep operational expertise.

Lisa Collins is a Principal ICHRA Advisor at ChoicePlus Benefit Advisors and a national speaker on ICHRA strategy. With a career built in leadership roles at benefits firms like Venteur and United Benefit Advisors, Collins has spent years at the intersection of broker partnerships and strategic solutions. As the ICHRA marketplace expands, she warns against putting too much weight on feature-heavy software demos.

"Knowledge and education are what differentiate a strong ICHRA administrator. Technology can look beautiful, but what really matters is what’s happening behind the scenes and who truly understands the full health insurance ecosystem.”

• Know the players: The first challenge for any broker or employer, Collins says, is recognizing that the term 'ICHRA administrator' doesn't mean just one thing. "There are different ways that these administrators or their technology are tackling the problem." Collins identifies a few distinct categories: tech-forward administrators built specifically for ICHRA, legacy systems that have been molded to fit ICHRA requirements, broker-centric SaaS models, and PEOs or payroll companies expanding into ICHRA administration.

• Divide and conquer: Because of these distinctions, Collins’ advice is to differentiate. "In my experience, an agency should not have one go-to administrator. I think they should have a couple different relationships depending on their clients' needs."

Assessing a partner's real value, Collins says, requires looking past the slick presentation and conducting rigorous due diligence. As ICHRA becomes a permanent fixture of benefits strategy and a legislative bid to codify it into law gains momentum, the ability to demonstrate a deep understanding of ACA and ERISA compliance is now a key test for any potential partner. "Brokers should be asking, 'What's my role? What's my responsibility? Who's handling compliance, and who truly understands how to design a plan?'"

• Starting small: That diligence is particularly important for brokers who, as Collins notes, may only place a very small percentage of their clients with ICHRA. "In those situations, they need a really strong administrator that truly understands not only ICHRA, but the entire employee benefit ecosystem."

• Compliance concerns: She explains that small problems are magnified when a client grows. An administrator that's a perfect fit for a 25-employee company can quickly become a liability as that company scales toward key compliance thresholds, especially when it comes to calculating affordability for employees. "Your compliance needs significantly change from 20 employees to 50 employees to 100 employees. If I were a client anticipating big growth in the future, I would want to make sure that administrator can answer every compliance need at each one of those benchmarks."

But administrators don't always have all the answers. Collins explains that scalability issues often stem from widespread stress across the benefits ecosystem. Many administrators struggle, she says, because "the carriers are not making this easy. They have an individual product now being pushed into a group model and the carriers don't know how to handle it." This friction at the carrier level makes it even more necessary to select an administrator with operational experience, as they are better equipped to manage the complexities of a system still in transition.

While the consumer-driven market pressure ICHRA creates is a powerful upside, realizing it hinges on having the right operational backbone. This dynamic forces employers and brokers to weigh the costs of staying with a misaligned partner against the disruption of switching vendors. Collins cautions that a new administrator isn't always the answer. First, ask the question: Is this an industry issue or an ICHRA vendor issue?

• The transition trap: Sometimes, she says, revisiting roles and responsibilities with an existing administrator is the less painful route for HR teams and employees. "Changing administrators is harder than rolling out ICHRA for the first time. The new vendor needs to understand the current enrollments, keeping those enrollments, and changing the payments. You have got to have an administrator that is really solid on their process," she says, once again emphasizing the importance of a careful vetting process and deep subject-matter expertise.