Employee
The employee’s self-only ICHRA calculation controls. It uses the self-only lowest-cost Silver premium after the employee’s self-only HRA amount.
Family affordability and ICHRA offers
Family offers under an ICHRA affect subsidy eligibility.
Under an ICHRA, affordability is generally based on the employee’s self-only lowest-cost Silver premium after the employee’s self-only HRA amount. If that offer is affordable, a spouse or child who is also offered the arrangement is generally ineligible for a premium tax credit—even if the offer is only $1 and even if the family member waives it.
Design each tier deliberately
Do not apply the traditional group family-cost test to ICHRA dependents.
Traditional group coverage and ICHRA / CHOICE use different affordability rules. Confirm both the employee calculation and exactly who receives the offer.
Spouse
An offered spouse generally follows the employee’s affordability result. A spouse not offered the ICHRA may be evaluated for PTC, but full tax-household income can reduce or eliminate the credit.
Dependent children
An offered child generally mirrors the employee result rather than receiving a separate family-cost test. If the employee’s ICHRA is affordable, the offered child generally cannot receive PTC.
Important ALE caution
Excluding children is not a simple subsidy strategy.
For an Applicable Large Employer, excluding dependent children from the ICHRA offer can create §4980H exposure. How that applies to a specific subsidy-planning design is under review and should be confirmed with the administrator and ERISA/ACA counsel before implementation.
Planning information only; not legal or tax advice. Review HealthCare.gov’s CHOICE Arrangement guidance, 26 CFR §1.36B-2 and the IRS employer shared-responsibility Q&A.