If you’re a dental practice owner tired of the rising cost and one-size-fits-all headache of traditional group health insurance, it’s time you met ICHRA plans.
ICHRA stands for Individual Coverage Health Reimbursement Arrangement.
And while the name sounds like something the IRS cooked up to make our lives harder, it’s actually a surprisingly flexible and modern solution—especially for dental practices with a mix of full-time, part-time, or contract team members.
Let’s break down what it is and why you should consider implementing it in your practice.
What Is an ICHRA?
An ICHRA is a type of employer-funded health benefit that allows you to reimburse your team for individual health insurance premiums and eligible medical expenses, tax-free.
Instead of signing your practice up for a group insurance plan (and crossing your fingers that it works for everyone), you offer a monthly reimbursement allowance. Each employee chooses the plan that fits them best, and you reimburse them through payroll.
Think of it as giving your team a health benefits “stipend”, but one that’s structured, compliant, and more cost-efficient than a traditional plan.
For dentists, this model offers a rare mix of flexibility, cost control, and tax benefits—all without sacrificing the value you’re offering your staff.
Why Should Dentists Care?
Great question. And as accountants who work closely with dental practice owners, we’re here to tell you: ICHRAs are one of the most financially flexible, tax-smart ways to offer health benefits right now.
Here’s why we love them for our clients:
1. You Stay in Control of Costs
One of the biggest headaches with traditional group plans? The constant price hikes. You get locked into a plan, and a year later, you’re staring down a 10–20% premium increase—whether your team used the coverage or not.
With an ICHRA, you set the budget. Want to offer $300 a month per employee? That’s your call. Prefer to give full-timers $500 and part-timers $200? Totally doable.
There’s no unpredictable renewal season or forced upgrades. You know your costs month to month, and you can adjust the allowance as your practice evolves.
As accountants, we love that kind of predictability. It means better cash flow planning, more control over margins, and fewer financial surprises eating into your bottom line.
2. No More Group Plan Drama
If you’ve ever shopped for a group plan as a small practice, you know the options aren’t great.
Premiums are high, provider networks can be limited, and negotiating power?
Practically zero.
ICHRAs remove the need to sponsor a group plan altogether. Your team shops for individual coverage that suits their needs, and you simply reimburse them for premiums and qualified expenses. No more wrangling with brokers, managing enrollments, or serving as the middleman every time there’s a billing issue.
You free up your time, your office manager’s time, and reduce the administrative headache that often comes with offering benefits.
3. It’s a Win for Employees
Here’s the thing: not all of your employees are in the same season of life. One may be single and healthy with no prescriptions; another might be managing a family of five with complex health needs.
With ICHRA, each person picks a plan that actually fits their situation—not one that’s been chosen to “kind of work” for the whole office. That means more satisfaction, better coverage, and fewer complaints coming back to you.
Plus, employees appreciate having the freedom to stay on their plan if they leave the practice, which adds to the benefit’s perceived value.
Another major win for employees is the ability to qualify for ACA subsidies. Depending on their personal circumstances, they could receive a partial or even full subsidy—drastically reducing their premium costs, or even bringing them down to zero.
If you offer a traditional group health plan, it disqualifies them from accessing these subsidies. In other words, your well-intentioned health plan could actually be hurting them.
4. Tax Benefits All Around
This is where we, as your accounting team, get particularly excited.
ICHRAs offer major tax advantages for both you and your employees:
- Reimbursements are 100% tax-free for employees, as long as they’re using them on qualifying coverage.
- For you, the employer, reimbursements are a deductible business expense—just like wages or rent.
- Unlike a raise (which would be taxed on both sides), ICHRA dollars go further because they aren’t subject to payroll tax or income tax.
So you’re offering meaningful benefits, but in a way that’s far more tax-efficient than simply increasing salaries to help with healthcare costs. You can reward your team without inflating your tax liability.
For many of our dental clients, this becomes part of a broader compensation and retention strategy, offering benefits that add real value without increasing overhead.
How ICHRA Works
Let’s walk through a straightforward example so you can see how this actually plays out in your dental practice:
You decide to offer each eligible employee $400/month to put toward health coverage. That number is totally up to you – and you can adjust it based on role, hours worked, or other classifications as long as you stay within the IRS guidelines.
Your hygienist, Sarah, shops around and finds a Silver Plan on her state’s health insurance marketplace that costs $385/month. It covers the doctors she likes, meets ACA minimum essential coverage standards, and works for her family’s needs.
Sarah enrolls in the plan, pays for it herself, and submits her proof of coverage and payment to your ICHRA administrator (or to you, if you’re handling it in-house—though we recommend outsourcing that part).
You review and approve the documentation, then reimburse her through payroll. The reimbursement is tax-free for both of you – meaning Sarah doesn’t pay income tax on the benefit, and you don’t pay payroll tax on it either.
From a financial and compliance standpoint, it’s clean and predictable. No group insurance renewals. No open enrollment chaos. No calls from employees asking why the dental plan changed again.
There are a few technical guardrails, like making sure the plans your employees choose meet certain standards but that’s where companies like Take Command Health or HealthSherpa come in. They’ll help set up the system, manage documentation, and ensure everything stays compliant without dragging you or your office manager into the weeds.
What’s the Catch?
Honestly? Not many. But here’s what to keep in mind:
- You can’t offer a group plan and an ICHRA to the same group of employees. It’s either/or.
- Employees must be enrolled in an individual health plan that qualifies. No short-term or limited coverage plans.
- You need good admin support. But thankfully, there are turnkey platforms that specialize in setting this up and keeping you compliant.
Is ICHRA Right for Your Practice?
Here’s a quick gut check to see if it might be a fit:
✅ You want predictable, budget-friendly costs
✅ You have a small or mixed team (full-time, part-time, maybe even 1099s)
✅ Your group plan options are limited or too expensive
✅ You want to offer health benefits without the admin burden
If you’re nodding “yes” to any of these, ICHRA is absolutely worth a closer look.
While it’s not the right fit for every practice, it’s become a smart, flexible solution for many dentists looking to simplify benefits while staying financially savvy.
Final Thoughts: ICHRA is Smart, Simple, and Dentist-Friendly
At Core Advisors, we help dental practice owners make smart financial choices—including how to structure benefits that attract and retain top talent without crushing your bottom line.
ICHRA isn’t just a buzzword—it’s a real, customizable way to give your team access to quality health insurance without locking your practice into a bloated group plan. It’s flexible, tax-efficient, and growing fast in popularity among healthcare professionals just like you.
Ready to see if ICHRA fits your practice?
Book a call with our team and let’s talk. We’ll walk you through setup, compliance, and how to make it work with your team and budget.
Until next time!
