Marketplace Premium Tax Credits (PTCs) interact with ICHRAs in a unique way.
Accepting an ICHRA
If an employee accepts an ICHRA:
- They cannot receive a PTC for any month they have ICHRA coverage
- This applies whether the ICHRA is affordable or unaffordable
Declining an ICHRA
If an employee opts out of the ICHRA:
- They may qualify for a PTC if the ICHRA is unaffordable and
- They meet standard Marketplace eligibility rules
Employees must be allowed to opt out annually for this reason.
Affordability Determines PTC Eligibility
An ICHRA is considered affordable if:
Employee’s required contribution for the lowest-cost silver plan in their rating area (self-only), minus the monthly ICHRA allowance, is ≤ the ACA affordability percentage for the year.
- If affordable → employee cannot get a PTC.
- If unaffordable → employee may decline and seek a PTC.
Monthly Interaction
The affordability determination happens monthly, aligned with Marketplace rules.