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ICHRA: What happens to your Premium Tax Credits when your employer offers coverage

This article is for employees enrolled in or offered an ICHRA through Take Command who want to understand how Premium Tax Credits are affected.

Written by Support

If your employer offers you an Individual Coverage Health Reimbursement Arrangement (ICHRA), you generally cannot receive Premium Tax Credits (PTC) for Marketplace coverage in the same month unless the ICHRA is considered unaffordable and you opt out of the ICHRA.

Can I use an ICHRA and Premium Tax Credits at the same time?

No. You cannot receive both:

  • ICHRA reimbursements, and

  • Premium Tax Credits (PTC) for Marketplace coverage

for the same coverage month. You must choose one option.

When does an ICHRA affect Premium Tax Credits?

Whether you can receive Premium Tax Credits depends on affordability:

If the ICHRA is affordable

  • You are not eligible for Premium Tax Credits

  • You can still use the ICHRA reimbursement benefit

If the ICHRA is unaffordable

  • You may choose either:

    • The ICHRA reimbursement, or

    • Premium Tax Credits (PTC)

  • You cannot use both at the same time

If you choose Premium Tax Credits, you must opt out of the ICHRA.

What does “affordable” mean for ICHRA?

An ICHRA is considered affordable based on IRS rules that compare:

  • The cost of the lowest-cost silver Marketplace plan (self-only coverage)

  • Minus your employer’s monthly ICHRA allowance

  • Compared to a percentage of your household income

If your required contribution is below the IRS affordability threshold, the ICHRA is considered affordable and blocks Premium Tax Credits.

What happens if I already receive Premium Tax Credits?

If you are already receiving Advance Premium Tax Credits (APTC):

  1. You must report your ICHRA offer to the Marketplace

  2. The Marketplace will reassess your eligibility

  3. Your Premium Tax Credits may be reduced or removed

  4. You may need to repay excess credits when filing taxes

Failing to update your Marketplace application may result in tax adjustments later.

What should I tell the Marketplace about my ICHRA?

When applying for Marketplace coverage, you must report:

  • That your employer offers an ICHRA

  • Your monthly allowance amount

  • Whether the coverage is for current or former employment

  • Whether the ICHRA is considered affordable (as determined by the Marketplace)

This information determines your eligibility for Premium Tax Credits.

Can I decline the ICHRA and keep Premium Tax Credits?

It depends on affordability:

  • If the ICHRA is affordable → you cannot receive Premium Tax Credits even if you decline it

  • If the ICHRA is unaffordable → you may decline it and receive Premium Tax Credits instead

You must formally opt out of the ICHRA to use Marketplace subsidies.

What happens if I accept the ICHRA?

If you accept the ICHRA:

  • You can purchase individual health insurance (including Marketplace plans)

  • Your employer reimburses eligible premiums or medical expenses

  • You cannot receive Premium Tax Credits while using the ICHRA

Where can I confirm my situation?

You can confirm your eligibility by:

  • Reviewing your ICHRA affordability notice in your Take Command portal

  • Checking Marketplace eligibility results during enrollment

  • Consulting a tax advisor for complex household income situations

The Marketplace makes the final determination of Premium Tax Credit eligibility.

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