Individual coverage HRA · CHOICE Arrangement
ICHRA for Michigan employers: a 2027 guide
Set a budget, and let employees choose their own plans. Whether that helps or hurts your team depends on their incomes and the counties they live in. Here’s how to tell.
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- 2027 affordability: 10.22%
- No participation minimum
- Any size employer
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How an ICHRA works
Instead of buying a group policy, you give each eligible employee a tax-free monthly allowance. They buy their own individual health plan, on HealthCare.gov or directly from an insurer, and you reimburse premiums (and, if you choose, other medical costs) up to the amount you set. HealthCare.gov now calls these CHOICE Arrangements. [HealthCare.gov]
- Any size employer with at least one employee who isn’t an owner or owner’s spouse.
- No minimum or maximum allowance, and no participation requirement.
- Allowances vary by class (full-time, part-time, seasonal, salaried, hourly, work location and others set by the rules), and within a class only by age (up to 3:1) and number of dependents.
- Written notice to current employees 90 days before each plan year, and to new hires when they become eligible. Employees must be allowed to opt out each year.
- Employees must have individual coverage: a Marketplace plan, an off-exchange individual plan, or Medicare Parts A and B or Part C. Short-term plans and dental- or vision-only plans don’t count.
The 2027 numbers that drive an ICHRA
10.22%The 2027 affordability percentage. An ICHRA is “affordable” if the employee’s cost for the lowest-cost self-only Silver plan, after your allowance, is under 10.22% of 1/12 of household income. [IRS Rev. Proc. 2026-26; HealthCare.gov]
14.2%The average 2027 increase Michigan individual-market insurers requested (proposed, subject to DIFS approval). That is the market your employees buy in. [DIFS]
$3,780 / $5,6702027 employer mandate penalty amounts for employers with 50+ full-time equivalents. An affordable ICHRA can satisfy the mandate. [IRS Rev. Proc. 2026-22]
Model ICHRA for my teamIn Michigan, where employees live changes the math
Seven insurers sold 2026 Marketplace plans in Michigan, all seven filed for 2027, and which ones serve an employee depends on the county. The lowest Silver plan for a 40-year-old ranged from $384.98 in Genesee to $769.09 in Marquette in 2026, so a single statewide allowance covers very different shares of the bill. [CMS QHP Landscape PY2026; healthinsurance.org]
| Where employees live (2026) | Insurers | Plans | Lowest Silver, age 30 | Lowest Silver, age 40 | Lowest Silver, age 60 |
|---|---|---|---|---|---|
| Genesee (Flint) | 6 | 64 | $341.90 | $384.98 | $817.55 |
| Ingham (Lansing) | 5 | 51 | $394.93 | $444.69 | $944.36 |
| Kent (Grand Rapids) | 7 | 80 | $418.55 | $471.29 | $1,000.84 |
| Washtenaw (Ann Arbor) | 5 | 59 | $430.84 | $485.12 | $1,030.21 |
| Oakland (Troy) | 5 | 64 | $446.43 | $502.68 | $1,067.50 |
| Wayne (Detroit) | 5 | 64 | $450.83 | $507.63 | $1,078.03 |
| Grand Traverse (Traverse City) | 4 | 42 | $484.92 | $546.01 | $1,159.53 |
| Saginaw | 4 | 42 | $518.29 | $583.59 | $1,239.32 |
| Marquette | 2 | 16 | $683.03 | $769.09 | $1,633.26 |
Source: CMS QHP Landscape Individual Market Medical file, plan year 2026, computed by county. Monthly full price, one non-tobacco adult. The lowest-cost Silver plan is the one used in the ICHRA affordability test. 2027 prices post when HealthCare.gov window shopping opens.
Regional pages: Grand Rapids · Detroit metro · Lansing · Ann Arbor
The “ICHRA gap”: when a small allowance hurts
An affordable ICHRA offer ends Marketplace tax-credit eligibility for that employee and their household, even if they decline it. If they’d have qualified for a bigger credit on their own, a modest allowance can leave them worse off.
Illustration, not a quote: a 40-year-old in Kent County with $48,000 of household income. 10.22% of $4,000 a month is $408.80. The lowest 2026 Silver plan there was $471.29, so any allowance above about $62.49 a month makes the offer “affordable” and switches off the credit. Whether that’s good or bad for the employee depends on how big their credit would have been. (Real 2027 math uses 2027 premiums, which aren’t published yet.) [CMS PY2026; IRS Rev. Proc. 2026-26]
Who tends to come out ahead
- Higher earners. Above 400% of the poverty level (about $63,840 for one person for 2027) there is no Marketplace credit at all, so your allowance is their only tax-advantaged help. [healthinsurance.org]
- Employers starting from zero. If the alternative is no benefit, a set budget with no participation minimum is often the easiest first step.
- Spread-out teams. Remote staff or multiple sites, each buying in their own county.
Where it can disappoint
- Mostly lower-wage staff who’d get large tax credits on their own.
- Teams that want a broad PPO: in Kent County, 63 of 80 2026 individual plans were HMOs.
- Employees in counties with few insurers, for example 4 in Grand Traverse in 2026.
Bronze + HSA, new since 2026
All Bronze and Catastrophic Marketplace plans became HSA-eligible starting in 2026, and the 2027 HSA limits are $4,500 self-only and $9,000 family. Pairing a premium-only ICHRA with a Bronze plan can let healthier employees save in an HSA. Reimbursing other medical expenses through the ICHRA can affect HSA eligibility, so plan design matters. [healthinsurance.org; IRS Rev. Proc. 2026-24]
Mixing ICHRA and a group plan
You can offer a group plan to one class and an ICHRA to another, but not a choice between them within the same class. When you mix, minimum class sizes apply to some classes: 10 employees if you have fewer than 100, 10% of employees at 100–200, and 20 above 200. [HealthCare.gov] Employees can pay the rest of an off-exchange premium pre-tax; Marketplace premiums can’t go through payroll pre-tax.
What we do before you commit
1. Census check
Ages, home ZIP codes and rough income bands (no health questions). We flag employees who may be better off with a tax credit.
2. Side-by-side
ICHRA vs. a group plan, level-funded, QSEHRA or a taxable stipend, county by county.
3. Set-up and support
Classes, allowances, notices, an administrator if you need one, and help for employees choosing plans during Open Enrollment (Nov 1–Jan 15).
Deeper reading from our Advisor’s Edge: ICHRA in Michigan after the 2025 Marketplace exodus, ICHRA design for mid-market employers, ICHRA vs. level-funded, and our ICHRA services page.
2-minute advisor Q&A
ICHRA in Michigan: does it fit?
A Nexus advisor answers the questions we hear most. (Video coming soon.)
- When is ICHRA better than a group plan?
- What's the ICHRA gap?
- Can I give full-time and part-time staff different amounts?
Frequently asked questions
Is ICHRA a good idea for Michigan employers in 2027?
It can be, especially for employers starting from zero, spread-out teams and higher earners who get no Marketplace credit. It can disappoint when most staff would qualify for large tax credits on their own, or when employees live in counties with few insurers. Model it employee by employee with 2027 premiums.
What makes an ICHRA affordable for 2027?
For 2027 plans, an ICHRA is affordable if the employee's monthly cost for the lowest-cost self-only Silver plan, after the allowance, is less than 10.22% of 1/12 of household income. An affordable offer ends the employee's Marketplace tax-credit eligibility.
Can I offer different ICHRA amounts to different employees?
Yes, by class (for example full-time vs. part-time, salaried vs. hourly, or work location), and within a class only by age (up to 3 to 1) and number of dependents.
Is there a minimum number of employees for ICHRA?
No. Any employer with at least one employee who isn't an owner or owner's spouse can offer one, and there's no participation requirement. Minimum class sizes apply only when you offer a group plan to some classes and an ICHRA to others.
When do I have to tell employees about an ICHRA?
Current employees need a written notice 90 days before the plan year starts, and new hires need it when they become eligible. A January 1 start lines up with individual-market Open Enrollment.
Will you sell my information?
No. It goes to one licensed Michigan advisor at Nexus and is never sold.
Where are you on the benefits ladder?
Keep exploring
Small-business pages by region
- Grand Rapids · Kent & Ottawa
- Detroit metro · Wayne, Oakland & Macomb
- Lansing · Ingham, Eaton & Clinton
- Ann Arbor · Washtenaw
Buying coverage for yourself or your family? See Michigan Open Enrollment 2027.