How the “One Big Beautiful Bill” Changes ACA & ICHRA: What Employers Should Know for 2026

The passage of the “One Big Beautiful Bill” (OBBB) in July 2025 marks a major turning point for employer health benefits, the Affordable Care Act (ACA), and Individual Coverage Health Reimbursement Arrangements (ICHRA). For employers and HR professionals, understanding these changes is essential for planning benefits in 2026 and beyond. This article breaks down the law’s impact, what’s changing, what’s staying the same, and what steps employers should take next.

What Is the “One Big Beautiful Bill”?

Signed into law on July 4, 2025, the OBBB is a sweeping legislative package that affects taxes, healthcare, and more. While much of the media coverage focused on politics and spending, the bill includes several provisions that directly affect the ACA, Medicaid, and employer-sponsored health coverage—especially ICHRAs.

Key Changes to ACA and Health Benefits

Stricter ACA Eligibility and Enrollment Rules

The OBBB introduces new rules for those seeking ACA marketplace coverage:

• Tighter eligibility checks: Applicants must now provide more detailed proof of income and citizenship to qualify for subsidies.
• No more automatic re-enrollment: Every enrollee must actively reapply each year; auto-renewal is gone.
• Shorter open enrollment: The federal and state marketplaces now have a strict 6-week window (Nov 1–Dec 15) for enrollment, starting in 2027.
• Work or engagement requirements: Some adults must meet work, school, or volunteer requirements to keep their subsidies.

These changes aim to reduce fraud and federal spending. However, they also add paperwork and hurdles for low-income individuals, which could lead to coverage gaps.

Medicaid Cuts and Ripple Effects

The OBBB tightens Medicaid eligibility, adds work requirements, and reduces federal funding to states. This is expected to increase the number of uninsured people, especially in states that didn’t expand Medicaid. As more people lose Medicaid, hospitals will see more uncompensated care, and those costs often get shifted to commercial insurers and employer-sponsored plans. This creates upward pressure on premiums for group health insurance.

Health Savings Account (HSA) Updates

The bill brings some positive changes for those using HSAs:

• More ACA enrollees can use HSAs: Starting in 2026, people with Bronze or Catastrophic ACA plans are eligible for HSAs.
• Direct primary care (DPC) is covered: DPC memberships now count as HSA-qualified expenses.
• Permanent telehealth coverage: High-deductible health plans (HDHPs) can permanently cover telehealth visits before the deductible, making virtual care more accessible.

What Was Left Out of the Bill?

Several high-profile proposals didn’t make it into the final law:

• No rebranding of ICHRA to “CHOICE Arrangements.”
• No requirement for employers to report ICHRA contributions on W-2s.
• No extension of enhanced ACA subsidies, which are set to expire at the end of 2025.
• No expansion of Section 125, so employees still can’t use pre-tax payroll deductions for ACA marketplace plans.

Without an extension, enhanced ACA subsidies will expire, making marketplace coverage less affordable for many. This could drive more people to seek employer-sponsored insurance.

Why Employer Health Insurance Costs May Rise

The OBBB’s changes are expected to increase premiums for both ACA marketplace and employer-sponsored group health plans. In some cases, group plans may see even steeper increases. Here’s why:

1. Hospitals shift costs: As Medicaid cuts increase uncompensated care, hospitals raise prices for commercial insurers, which affects employer plans.
2. Higher-risk individuals return to group plans: If ACA enrollment drops due to stricter rules, more people with chronic conditions may move back to employer plans, worsening the risk pool.
3. No subsidy buffer: Unlike ACA plans, employer-sponsored insurance doesn’t have federal subsidies. When premiums rise, employers and employees absorb the full cost.

The Role of ICHRA in a Changing Landscape

Despite uncertainty, ICHRA adoption is expected to keep growing. ICHRAs allow employers to offer a defined contribution for employees to purchase their own health insurance, giving businesses more control over costs and flexibility.

Why ICHRAs Are Gaining Popularity

• Budget control: Employers set a fixed allowance, avoiding unpredictable group plan increases.
• Flexibility: Employees can choose plans that fit their needs.
• No reliance on subsidies: ICHRAs don’t depend on government subsidies or insurer negotiations.

Forecasts suggest ICHRA adoption could reach 5.8 million covered lives by 2026 and up to 15 million by 2032, with the strongest growth among mid-sized employers (50–500 employees).

What Employers Should Do Next

With so many changes, employers and benefits advisors need to be proactive. Here are practical steps to consider:

Review and Adjust ICHRA Allowances

As marketplace premiums rise, fixed ICHRA contributions may no longer meet affordability requirements. Review and adjust allowances to ensure compliance and competitiveness.

Consider Segmented Class Design

Tailoring ICHRA classes by geography, job function, or employment status helps optimize spending and coverage outcomes.

Communicate Changes Clearly

Make sure employees understand new enrollment rules, reapplication requirements, and potential changes to subsidies.

Monitor Compliance

Stay updated on federal and state regulations to avoid penalties and ensure your benefits remain attractive and compliant.

Looking Ahead: Planning for 2026 and Beyond

The OBBB brings both challenges and opportunities for employers. Rising premiums and stricter rules mean that traditional group health plans may become less sustainable. ICHRAs offer a way to control costs and provide employees with more choice, but employers must stay alert to regulatory changes and market trends.

At Venteur, we’re committed to helping you navigate these changes. Our tools and expertise can help you model ICHRA strategies, ensure compliance, and keep your benefits competitive in a shifting landscape.