Employees often ask whether they can use an ICHRA and still collect Advanced Premium Tax Credits (APTCs) on the Health Insurance Marketplace. The short answer is:
Employees cannot use ICHRA funds and premium tax credits at the same time.
However, employees may still be eligible for APTCs if your ICHRA offer is considered unaffordable. Refer to our article about Affordability Rules for Applicable Large Employers (ALEs).
Can Employees Use Both an ICHRA and Tax Credits?
No. Under IRS rules, employees must choose one or the other:
- ✔️ Use the ICHRA and waive any premium tax credits even if they qualify, or
- ✔️ Opt out of the ICHRA and keep any Marketplace tax credits if the ICHRA is unaffordable for them.
Employees cannot “stack” the ICHRA allowance on top of APTCs.
What Determines if an Employee Can Keep Tax Credits?
Whether employees can keep their APTCs depends on ICHRA affordability.
If the ICHRA is affordable:
- The employee must use the ICHRA.
- They are not eligible for premium tax credits.
- If they decline the ICHRA, they still cannot claim credits.
If the ICHRA is unaffordable:
- The employee may opt out of the ICHRA.
- They may qualify for tax credits based on their household income.
- They cannot use both simultaneously.