Sick individual working to embrace America's fantasy (8)
I believe the answer is:
illusion
'fantasy' is the definition.
('illusion' can be a synonym of 'fantasy')
'sick individual working to embrace america's' is the wordplay.
'sick' becomes 'ill' ('ill' can be a synonym of 'sick').
'individual' becomes 'i'.
'working' becomes 'on'.
'to embrace' means one lot of letters goes inside another.
'america's' becomes 'us' ('US' can be a synonym of 'america'**).
'ill'+'i'+'on'='illion'
'illion' placed around 'us' is 'ILLUSION'.
(Other definitions for illusion that I've seen before include "Something a person wrongly believes to exist" , "False vision or mirage (8)" , "Deceptive impression" , "Magic trick" , "False appearance" .)