What ACA Subsidy Expiration Means for Coverage Costs, Employer Strategy, and ICHRAs: Q&A with Ben Light

The Affordable Care Act subsidies—expanded in 2021 to offer broader coverage for families and individuals—are set to expire at the end of 2025. Ben Light, VP of partnerships at Zorro and expert in Individual Coverage Health Reimbursement Arrangements (ICHRAs), discussed alternative health care plan options for individuals who may lose their coverage come January 1, 2026.

ICHRAs allow individuals to “customize” their health care coverage, Light said in an interview with The American Journal of Managed Care^® (AJMC^®). Under this course of coverage, employees select their own marketplace insurance plans and are then reimbursed for their premium costs from their employer, who decides how much they will reimburse employees based on a benchmark index plan in the marketplace.¹ Yet, many people may not be able to afford their premiums up front under this plan, which is why many employers, through ICHRA vendors—like Zorro—might pay employees' premiums directly to their chosen carrier and then facilitate payroll deductions, Light said.

While ICHRAs may be a better option for some individuals, with the ACA subsidies set to expire and rising premiums, experts predict more people may decide to go uninsured—especially those whose health care utilization may be lower.² Whereas individuals who cannot forgo health care coverage may turn to their employer for compensation, Light said.

However, rising premiums also increase costs for employers who are not expected to bear the brunt of health care coverage should the ACA subsidies expire, Light explained. In this Q&A with Light, he discusses the weighted implications for employees and employers ICHRAs may subsidize should the ACA subsidies expire at the end of this year.

This transcript has been lightly edited.

AJMC: How does the ICHRA model differ from traditional group health insurance and other health-related savings accounts?

Light: What happens is the employer gives you an amount of money that's generally calculated off of an index plan. We'll take the low-cost silver plan, for example, or the low-cost gold plan, and we'll work with an employer at Zorro, and we'll say, "Okay, what if you pay for 80% of the cost of the low-cost gold plan, that then will convert to a dollar amount for each employee based on their age—because 48 or 50 states do age-based pricing for the individual market. Once that's set, if I'm an employee and I'm 53, if my employer says, “Okay, I'm giving you $850 for this year,” but I want the $1,000 plan, I still have to pay the $150 difference.

What we do at Zorro, and I know a lot of other ICHRA vendors do as well, is we actually have a payment system where we're facilitating sending the full premium to the carrier, and then the employer is doing a payroll deduction. To the employee, it still can look very much like a traditional group insurance setup from the financial side.

My employer makes a contribution. I pay my portion through payroll. I get coverage. The original design of the ICHRA was that as an employee, you go out and pay the full amount, and then you get reimbursed. We've reversed that because the employer often can handle that float of money easier than an employee can.

AJMC: What are the key advantages and potential drawbacks of selecting individual coverage through an ICHRA for employees and employers?

Light: If you look at individuals who aren't covered right now under an employer's plan and are just buying coverage through the ACA using the tax credits that were expanded in 2021—the ones that are expiring at the end of this year—I think you're going to have people that fall into a couple of different camps. If your premium is going up significantly, and you're relatively healthy, and you feel like “I can take the risk,” they’ll likely drop that coverage. The second group is going to [consist of] people who, again, are relatively healthy and bought a silver or maybe a gold plan. They might look [at their needs and current coverage] and say, “I'm going to buy down to a bronze plan now, so I can still have coverage, but I'll spend more, but maybe not so much more.”

But then the third group [consists of] people who really need the coverage, and I think they're going to have to make some tough choices around how they continue to buy that premium, because if not, going uncovered for them is going to be even more expensive. And probably expensive in the way that it means they will forego treatment or forego medications, which means they'll get sicker and sicker, and then by the time they actually show up in an emergency room, they're really in trouble. I think you're going to see those people in 3 categories.

For employers who are looking at, “What do we do right now?” I know so much of the focus is on the ACA right now and what's going to happen with these rates when the tax credits go away, but people aren't talking quite as much about the fact that even the traditional group rates have not been all that good this year. We see a lot of companies that are exploring the ICHRA because they've gotten a 20%, 25%, 40%, or 50% renewal on their traditional group plan. I think you're going to have people looking at the ICHRA because it's a shift of risk, and you're moving that risk from the population, just in your company now, out to the individual market.

There's a chance that you can see some contraction in the total individual market, but eventually, I think you'll see it growing back again as more people start to explore other alternatives, like ICHRAs, to get that risk off of them and onto the individual market.

AJMC: What implementation or communication challenges tend to arise during the transition from a group plan to an ICHRA?

Light: The biggest complication around it falls into two categories, one being communication. We're teaching people a new way to shop for coverage. Previously, most people went to their employer, who said, "Here are the two or three plans that we're offering now." I live in Cleveland. I have 190 plans available to me on the individual market. You need the right communication strategy timeline.

Everyone has to be educated on how to do this in order to do it successfully; that's one big piece of it. And for us at Zorro, we try to start really early and make sure that the leadership of the company understands everything, and then you can have meetings with the individual employees and give them the right tools to help them enroll. We have an AI-driven platform that helps employees to pick their plans, and you can very quickly reduce 190 plans down to 5 that make sense for you. That's one piece that's really important: the communication and the tools to help educate people.

The second piece is the execution once everyone's picked their plans. If I'm a company of 100 people and 75 are enrolling in coverage under a group plan structure, I send 1 application with 75 names on it. Under the ICHRA, we're going to send 75 separate applications. From a logistical standpoint, it requires a little bit more effort. But the nice thing is, again, we're leveraging technology to be able to make that more efficient and working with partners in the industry to reduce the amount of time it takes to input every application. Five years ago, it was ultra manual. Today, there's a lot—we've cut the amount of time to submit an individual application by probably 90%, so we're making all of that more efficient and removing what we often talk about as the friction of the individual market.

AJMC: If major health care reforms continue, how might ICHRAs evolve, or even expand, as part of the US benefits landscape?

Light: I think the first thing that will happen is, I talked about how people have to pick their own plans and right-size their coverage. We are going to continue to see more and more people who are taking ownership over the health care experience, not just shopping for coverage, but all of their care. [For example], going to an independent imaging center instead of the MRI machine down the hall in the hospital where they got their care, and doing more competitive shopping around for procedures that they need, or going to independent lab testing facilities and being better consumers of their health care dollar.

ICHRA is a piece of that, and in a small way, it starts people down that path. I think you're going to see more and more of that as people are forced to become better consumers of their health care. I also think that you're going to see the carriers who provide the plans in the individual market start to be more creative around some of what they're offering. Because we live in a world now where everyone has this expectation of things being customized to them. The playlist I listen to, I've created; the things I watch on Netflix or Hulu, I have picked; and my news feed and social media have become customized to me because of the algorithms.

Carriers are going to be forced to put out plans that give people a little more ability to customize them, or at least find something that really fits their specific needs. I think you're going to see more of that, and you'll have people who shop and find something that makes sense for their unique situation. That could be something that's disease-specific, or it could be something that includes the select providers that they're interested in. For now, things are still a little more off the shelf. You're seeing some creativity around it, but I think you're going to see more and more of it.

References

1. McCrear S. Expiring ACA subsidies and CMS payment models raise costs for consumers and employers. AJMC. November 25, 2025. Accessed December 1, 2025. https://www.ajmc.com/view/expiring-aca-subsidies-and-cms-payment-models-raise-costs-for-consumers-and-employers

2. Steinzor P. 5 consequences if ACA premium subsidies end in 2026. AJMC. October 31, 2025. Accessed December 1, 2025. https://www.ajmc.com/view/5-consequences-if-aca-premium-subsidies-end-in-2026