Answers · Eligibility & rules
Can employees keep their premium tax credit if we offer an ICHRA?
No, not if the ICHRA offer is considered affordable: an employee offered an affordable ICHRA must decline the allowance entirely to claim a premium tax credit, and cannot use both.
Affordability is tested by comparing what the employee would pay for the lowest-cost silver plan in their area, after the allowance, against a percentage of their household income. If the remainder falls under the threshold, the offer is affordable and the tax credit is off the table.
If the offer is not affordable, the employee may turn it down and claim the credit instead. That makes the interaction genuinely important for lower-wage workforces, where some employees may be better off on a subsidised marketplace plan than on any employer offer.
This is one of the things the free analysis checks. For a workforce with a wide wage range, the right answer is sometimes an ICHRA for one class and something different for another.
Last reviewed 2026-08-21. Premium figures are plan year 2026 on both sides of every comparison, from the CMS Marketplace Public Use Files (individual market) and Ideon (small group). Employer counts from BLS QCEW 2024 Q2. All savings figures are ranges and estimates, not quotes or guarantees.
Related questions
How is ICHRA affordability tested?
By comparing what the employee would pay for the lowest-cost silver plan in their area after the allowance against a percentage of household income. Under the threshold, the offer is affordable.
What if the offer is not affordable?
The employee may decline the allowance and claim a premium tax credit instead.
Can an employee use both?
No. An affordable ICHRA offer and a premium tax credit are mutually exclusive, which matters most for lower-wage workforces.