Employees cannot receive both a tax credit (PTC) and reimbursement through ICHRA.
How exactly does ICHRA affect my tax credit?
The effect of ICHRA on your premium tax credit depends on whether your company's ICHRA is considered "Affordable."
- If an ICHRA is “affordable,” employees are not eligible for tax credits (PTC) and they should instead accept the reimbursement.
- If an ICHRA is “unaffordable," employees can choose either the ICHRA or tax credits (PTC).
What does "Affordable" mean?
ICHRA is considered affordable if the remaining amount an employee must pay for a self-only silver plan on the exchange does not exceed 1/12 of their household income.
How do I know if the ICHRA I’ve been offered is considered affordable?
You can determine if the ICHRA is affordable with our ICHRA Employee Affordability Calculator.
When you get onboarded onto our platform, we'll walk you through it! We'll help you determine whether your ICHRA is affordable to you and whether you can accept tax credits.
Can I go directly to the Exchange?
Yes. The Exchange website will provide individuals information on how to determine affordability for ICHRA. When you enroll in health insurance coverage through the Exchange, the Exchange will ask you about any coverage offered to you by your employer, including through an HRA. Your ability to claim the premium tax credit may be limited if your employer offers you coverage, including an HRA.
The Exchange also will determine whether you are eligible for advance payments of the premium tax credit, which are amounts paid directly to your insurance company to lower the cost of your premiums. For more information about the premium tax credit, including advance payments of the premium tax credit and premium tax credit eligibility requirements, see irs.gov/aca.
What information do I need to provide to the Exchange when I apply for my insurance plan?
Please refer to the ICHRA Employee Notice in your Member Portal for more detailed information on what information to provide. If you’re applying for advance payments of the premium tax credit, you’ll need to provide information from the answer to “What are the basic terms of the ICHRA that my employer is offering?” on page 2. You will also need to tell the Exchange whether you are a current employee or former employee.
For more information, read our blog titled ICHRA, affordability, and premium tax credits, and check out our ICHRA guide for more on affordability.