Health & Finance

ICHRAs and Advanced Premium Tax Credits (APTCs)

Team Orca
Sep 16, 2023

If you're navigating the world of ICHRAs, there's a pivotal intersection you need to be aware of: the interplay between ICHRAs and the Advanced Premium Tax Credit (APTC), widely recognized as the Obamacare subsidy.

Breaking Down the APTC

The APTC is a federal subsidy crafted to make health insurance more affordable for those with lower incomes. In essence, this subsidy directly cuts down the monthly insurance premium for eligible individuals who select a plan from the Obamacare Marketplace. Think of it as a financial boost for those in need.

Not everyone qualifies for an APTC. The primary determinants include:

  • Income Range: Your household income must be between 100% and 400% of the federal poverty line for your family size.
  • No Access to Affordable Alternative Coverage: You aren't eligible for other "minimum essential coverage", such as affordable employer-sponsored insurance, Medicare, or Medicaid.
  • Filing Status: Generally, if you're married, you must file taxes jointly to qualify (with some exceptions).

The Non-Negotiables of ICHRA and APTC

If you're offering an ICHRA that’s seen as affordable and provides minimum value, your employees **cannot** claim APTCs

Your employees essentially have a straightforward choice:

1. Opt for the ICHRA, instantly making them ineligible for APTCs, regardless of potential qualification based on income.

2. Turn down the ICHRA and possibly tap into the APTC, but only if they meet all other requirements.

The ICHRA Notice

If you’re a business offering an ICHRA, there's a crucial piece of communication – the ICHRA notice. This is a formal document notifying employees about the ICHRA and its potential implications. The notice should clearly indicate that accepting the ICHRA will bar employees from receiving APTCs for Marketplace coverage.


Remember, when it's about ICHRAs, APTCs can't mix if the ICHRA meets ACA Affordability Thresholds. Make this abundantly clear to your employees to steer clear of misunderstandings or unintentional financial consequences. With knowledge comes the power to make decisions that best serve each individual's needs.

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