New Federal Bill Would Push ICHRA Awareness to Small Businesses — Here’s What It Means for You
If you run a small business and have been struggling to figure out how to offer health benefits without breaking the bank, a new piece of federal legislation may soon put some answers in front of you — whether you go looking for them or not.
The Small Business Health Options Awareness Act of 2026 recently cleared the House Committee on Small Business and is headed to the full House for consideration. If it passes, it would require the U.S. Small Business Administration to actively promote a health benefit tool called an Individual Coverage Health Reimbursement Arrangement (ICHRA) to small employers across the country.
That’s a meaningful shift. Right now, many small business owners either don’t know ICHRAs exist or aren’t sure how they work. This bill aims to change that — and it could open a new door for how you approach employee health coverage.
What Is the Small Business Health Options Awareness Act?
Introduced by Rep. Beth Van Duyne (R-TX-24) and co-sponsored by Representatives Claudia Tenney, Kevin Hern, and Rob Bresnahan, the bill directs the SBA to disseminate information about ICHRAs that has already been developed by the Treasury Department, the Department of Health and Human Services, and the Department of Labor.
That information would flow through:
- Small Business Development Centers (SBDCs) — the local offices that already help small businesses with financing, planning, and compliance
- SBA district offices across the country
- SBA communication channels — press releases, social media, and website postings
The goal isn’t to mandate that any business adopt an ICHRA. It’s to make sure small business owners know the option exists and understand how it works — something many currently don’t.
As Rep. Van Duyne put it: “The tens of millions of American small business owners deserve to know what options are out there.”
Why This Matters for Small Employers
Health insurance is one of the biggest challenges small businesses face. According to the Kaiser Family Foundation, the average annual premium for employer-sponsored family coverage hit $25,572 in 2024 — and that number has climbed steadily year over year. For a business with 10 or 20 employees, that kind of expense can be the difference between offering benefits and not offering them at all.
ICHRAs offer a different model. Instead of picking a single group health plan and passing the premium bill along to the business, an ICHRA lets the employer:
- Set a fixed monthly contribution — say, $400 per employee — that fits the company’s budget
- Reimburse employees tax-free for the individual health insurance premiums they choose on their own
- Let employees pick their own plans from the ACA marketplace, tailored to their specific needs — whether that means finding a plan with a particular doctor, managing a chronic condition, or balancing coverage with household budgets
The employer gets predictable costs. Employees get choice. And the administrative burden of managing group plan renewals, carrier negotiations, and open enrollment periods drops significantly.
The bill’s endorsement from Mark Bertolini, CEO of Oscar Health, underscores the point: “ICHRA is the win-win model that gives employers predictable costs and employees the ability to choose the plan that is best for them and their families.”
ICHRAs Aren’t New — But Awareness Has Been the Gap
Individual Coverage HRAs were created under federal regulations finalized in 2019 and became available to employers in 2020. They’ve been legal and operational for over six years. But adoption has been slower than the tool’s flexibility would suggest — largely because many small business owners have never heard of them, or assume health benefits have to come through a traditional group plan.
Research from the Employee Benefit Research Institute (EBRI) found that ICHRAs are expanding access to health coverage, particularly among small businesses, rather than displacing traditional group plans at larger firms. In other words, ICHRAs tend to fill a gap where group coverage wasn’t reaching — not to replace what was already working.
That’s exactly the gap this bill is designed to close. The SBA already has the infrastructure — SBDCs and district offices that small business owners trust and visit regularly. Putting ICHRA information into those channels is a low-cost, high-reach way to connect employers with a benefit option they may not have considered.
What Are the Potential Trade-offs?
No piece of health policy is without its complications. Some organizations, including Small Business Majority, have expressed concern that promoting ICHRAs could potentially pull employees off ACA marketplace plans where they currently receive premium tax credits — since employer-sponsored ICHRA coverage generally disqualifies individuals from claiming those subsidies.
That’s a legitimate consideration, and it’s worth understanding before making any decisions. The math works differently for every business and every employee depending on income levels, family size, and the local insurance market.
What the bill does not do is force anyone into an ICHRA. It doesn’t replace group plans. It doesn’t change what’s available on the marketplace. It simply puts information in front of small business owners who may want to explore an alternative — and lets them decide whether it fits.
How Does a Business Actually Use an ICHRA?
If you’re a small business owner reading this and wondering what the practical steps look like, here’s the short version:
- You decide how much to contribute. There’s no minimum or maximum — you set the monthly amount that works for your budget.
- You define which employees are eligible. ICHRA rules let you offer different amounts to different employee classes (full-time, part-time, seasonal, geographic location).
- Employees choose their own plans. They shop the individual marketplace and pick coverage that fits their lives.
- You reimburse them. Contributions are made on a pre-tax basis, and employees use them to pay premiums and qualified medical expenses.
You’ll typically work with an HRA administrator or a licensed insurance agency to set up the plan and handle compliance — the regulatory requirements around ICHRAs are manageable, but they do exist.
What This Means Going Forward
If the Small Business Health Options Awareness Act passes the full House and ultimately becomes law, the SBA would begin integrating ICHRA information into its small business outreach within months. That means more small business owners — in Omaha, in Katy, in Lansing, and in communities across our licensed states — would start hearing about a benefit option that could change how they think about employee health coverage.
At Trek Insurance Solutions, we work with small business owners every day who are navigating exactly this question: How do I offer health benefits without pricing myself out of business? ICHRAs are one of the tools we walk clients through — not as a one-size-fits-all answer, but as a flexible option worth understanding.
If you’re a small business owner who wants to know whether an ICHRA could work for your team, we’re here to walk you through it. No obligation, no pressure — just straight answers about what your options actually look like.
Call us at 888-960-0442 or visit trekis.net to start the conversation. Licensed, independent agency.