ICHRA vs subsidy: when you can turn the allowance down
An ICHRA blocks your premium tax credit unless it is unaffordable and you opt out. Affordability compares your allowance to the lowest cost silver plan where you live. We priced that benchmark in all 349 rating areas we cover. It ranges from $384.98 to $1,272.01 a month at age 40.
The short version
Your employer offers you an ICHRA instead of a group health plan.
You look at the marketplace and see a subsidy you might qualify for. You cannot have both. You have to pick one, and in most cases the choice is already made for you.
The rule that decides it is a single subtraction. It turns on a price that changes with your age and your county.
The rule in one sentence
If your employer offers you an ICHRA, you cannot claim a premium tax credit unless two things are true at once.
The IRS states it plainly:
"… you are not allowed a Premium Tax Credit for Marketplace coverage unless 1) the ICHRA is considered unaffordable and 2) you opt-out of receiving reimbursements …"
That is from the IRS premium tax credit questions and answers. The same answer requires you to enroll in marketplace coverage.
So an affordable ICHRA is not an option you weigh. It is a door that closes. You take the allowance, and the subsidy is gone.
The formula, exactly as written
"Affordable" here is a defined term. It is not about whether you can pay.
The regulation at 26 CFR 1.36B-2(c)(5) sets out the test. Take the monthly premium for the lowest cost silver plan for self-only coverage in your rating area. Subtract your monthly allowance. What is left is your required contribution.
The rule defines that contribution as "the excess of" one amount over another. The first is "the monthly premium for the lowest cost silver plan for self-only coverage" offered on the Exchange where you live. The second is the "monthly self-only HRA" amount your employer makes available.
That text is in the Code of Federal Regulations.
The ICHRA is affordable if that leftover amount is no more than a set share of your household income. For 2026 that share is 9.96%. The IRS set it in Revenue Procedure 2025-25:
"For plan years beginning in calendar year 2026, the Required Contribution Percentage ... is 9.96%."
So the whole test is:
Lowest cost silver plan − your allowance ≤ 9.96% × your income ÷ 12
If that is true, the ICHRA is affordable and your subsidy is gone. If it is false, you may turn the allowance down and buy a subsidised plan instead.
Two things that trip people up
The benchmark is the lowest cost silver plan. Marketplace subsidies use the second lowest cost silver plan. They are different plans and usually different prices. Do not reuse one number for the other job.
The benchmark is also self-only, even if you are covering a family. Your spouse and children do not raise the benchmark. They do change what you actually pay.
What we measured
The benchmark price is the part nobody publishes in a usable form. So we computed it.
We took every silver plan in our 2026 rate panel and found the cheapest self-only premium in each rating area, at each age. That gives the exact number the affordability test calls for.
One check first. The rule counts only plans offered on the Exchange. All 1,453 silver plan components in our panel have an on-exchange variant, and none are off-exchange only. So every plan in this calculation is eligible to be the benchmark.
| What we counted | Number |
|---|---|
| Rating areas priced | 349 |
| States covered | 30 |
| Silver plan components | 1,453 |
| Silver components with an on-exchange variant | 1,453 |
| Silver components that are off-exchange only | 0 |
The benchmark swings more than 3x across the country
At age 40, the lowest cost silver plan runs from $384.98 a month to $1,272.01. The middle rating area sits at $625.40.
That is a 3.3x spread on the number that decides whether you keep your subsidy.
| State | Rating areas | Cheapest | Median | Priciest | Median allowance needed at $60k |
|---|---|---|---|---|---|
| Wyoming | 3 | $1,026.28 | $1,072.19 | $1,102.93 | $574.19 |
| West Virginia | 11 | $911.18 | $1,055.63 | $1,133.41 | $557.63 |
| Alaska | 3 | $984.24 | $1,010.00 | $1,035.50 | $512.00 |
| Arkansas | 7 | $752.74 | $752.74 | $752.74 | $254.74 |
| Nebraska | 4 | $640.10 | $718.33 | $826.11 | $220.33 |
| Tennessee | 8 | $646.11 | $699.31 | $779.04 | $201.31 |
| Delaware | 1 | $685.23 | $685.23 | $685.23 | $187.23 |
| Montana | 4 | $550.61 | $682.03 | $739.35 | $184.03 |
| Louisiana | 8 | $542.04 | $679.55 | $711.13 | $181.55 |
| Utah | 6 | $559.31 | $677.77 | $884.78 | $179.77 |
| Florida | 67 | $554.22 | $669.18 | $1,272.01 | $171.18 |
| Texas | 27 | $539.67 | $652.92 | $920.02 | $154.92 |
| Arizona | 7 | $437.75 | $651.86 | $900.57 | $153.86 |
| Missouri | 10 | $523.28 | $648.02 | $779.74 | $150.02 |
| North Carolina | 16 | $540.11 | $644.73 | $833.68 | $146.73 |
| Mississippi | 6 | $598.14 | $637.05 | $660.69 | $139.05 |
| Alabama | 13 | $583.09 | $632.79 | $669.23 | $134.79 |
| Wisconsin | 16 | $525.67 | $612.86 | $730.59 | $114.86 |
| Kansas | 7 | $565.02 | $609.77 | $746.38 | $111.77 |
| Oklahoma | 5 | $561.23 | $568.33 | $675.54 | $70.33 |
| South Carolina | 46 | $455.77 | $551.64 | $661.68 | $53.64 |
| Hawaii | 1 | $532.95 | $532.95 | $532.95 | $34.95 |
| South Dakota | 4 | $511.88 | $530.14 | $760.94 | $32.14 |
| Oregon | 7 | $505.35 | $522.45 | $591.00 | $24.45 |
| Ohio | 17 | $481.93 | $519.24 | $591.95 | $21.24 |
| North Dakota | 4 | $438.56 | $479.53 | $594.57 | $6.95 |
| Michigan | 16 | $384.98 | $478.21 | $769.09 | $0.00 |
| Iowa | 7 | $451.56 | $476.17 | $500.96 | $0.00 |
| Indiana | 17 | $440.02 | $469.04 | $508.66 | $0.00 |
| New Hampshire | 1 | $388.00 | $388.00 | $388.00 | $0.00 |
The last column is the allowance needed in the middle rating area of each state. It assumes a 40-year-old earning $60,000.
In four states the answer is zero. The benchmark is already cheap enough that the test passes with no allowance at all.
Florida is one state with two different answers
Look at the Florida row again. The cheapest rating area is $554.22 and the priciest is $1,272.01.
Same state, same rules, same employer. The benchmark more than doubles depending on which county the worker lives in.
An employer setting one national allowance is not setting one policy. They are setting a policy that passes the affordability test in some counties and fails it in others, without meaning to.
Age moves the answer more than income does
The benchmark is an age-rated premium, so it climbs steeply. Across our 349 rating areas:
| Age | Cheapest area | Median area | Priciest area |
|---|---|---|---|
| 21 | $301.24 | $489.37 | $995.31 |
| 25 | $302.44 | $492.83 | $999.29 |
| 30 | $341.90 | $555.42 | $1,129.68 |
| 40 | $384.98 | $625.40 | $1,272.01 |
| 50 | $538.00 | $874.00 | $1,777.62 |
| 60 | $817.55 | $1,328.13 | $2,701.27 |
| 64 | $903.69 | $1,468.07 | $2,985.93 |
The median benchmark triples from age 21 to age 64. Income affects only the right side of the test, and it moves in a straight line. Age moves the left side, and it moves fast.
That is why two coworkers on the same salary with the same allowance can get opposite answers.
How often the allowance is "affordable" at zero dollars
Here is the part that surprises people.
If the benchmark in your area is already below 9.96% of your income, then the test passes even when the allowance is tiny. Your employer does not have to be generous to close the subsidy door. They only have to offer an ICHRA at all.
We counted how many of the 349 rating areas work that way, by age and income.
| Age | Income | Monthly threshold | Areas where any allowance is affordable | Share |
|---|---|---|---|---|
| 25 | $40,000 | $332.00 | 2 of 349 | 0.6% |
| 25 | $60,000 | $498.00 | 180 of 349 | 51.6% |
| 25 | $80,000 | $664.00 | 321 of 349 | 92.0% |
| 40 | $40,000 | $332.00 | 0 of 349 | 0.0% |
| 40 | $60,000 | $498.00 | 46 of 349 | 13.2% |
| 40 | $80,000 | $664.00 | 233 of 349 | 66.8% |
| 60 | $40,000 | $332.00 | 0 of 349 | 0.0% |
| 60 | $60,000 | $498.00 | 0 of 349 | 0.0% |
| 60 | $80,000 | $664.00 | 0 of 349 | 0.0% |
A 25-year-old earning $60,000 is locked out of subsidies in more than half the rating areas we cover, no matter how small the allowance is.
A 60-year-old is locked out in none of them, at any of these three incomes. The benchmark is simply too expensive for the test to pass.
So the younger worker usually has no choice. The older worker usually does.
What an employer has to offer for the test to pass
Flip the same arithmetic around. This is the allowance needed to make the ICHRA affordable, which is the same as the allowance needed to take the subsidy off the table.
| Age | Income | Median area | Most expensive area |
|---|---|---|---|
| 25 | $40,000 | $160.83 | $667.29 |
| 25 | $60,000 | $0.00 | $501.29 |
| 25 | $80,000 | $0.00 | $335.29 |
| 40 | $40,000 | $293.40 | $940.01 |
| 40 | $60,000 | $127.40 | $774.01 |
| 40 | $80,000 | $0.00 | $608.01 |
| 60 | $40,000 | $996.13 | $2,369.27 |
| 60 | $60,000 | $830.13 | $2,203.27 |
| 60 | $80,000 | $664.13 | $2,037.27 |
To make an ICHRA affordable for a 60-year-old earning $60,000 in every area we cover, an employer would need to offer $2,203.27 a month. For a 25-year-old on the same salary, $501.29 does it everywhere.
That gap is not a rounding difference. It is the whole design problem with a flat allowance.
What changed on the subsidy side for 2026
The choice is not just about the ICHRA. The value of the thing you would be choosing instead also moved.
For tax years 2021 through 2025, Congress removed the income ceiling on the premium tax credit. That expansion covered those years only. The IRS describes it in the past tense:
"For tax years 2021 through 2025, Congress temporarily expanded eligibility for the Premium Tax Credit by eliminating the requirement …"
The requirement it lifted was the ceiling at 400 percent of the federal poverty line. That ceiling was not lifted for 2026.
The repayment cap is gone as well. The same IRS fact sheet says:
"For tax years after 2025, you must repay the full amount by which your advance credit payments exceed your Premium Tax Credit."
Both quotes are from the IRS premium tax credit updates.
Two practical effects. Turning down an ICHRA to chase a subsidy is worth less if your income is above the limit. And if you estimate your income too low, you now repay the whole difference.
If you use tobacco, use the non-smoker price
The regulation is specific about this. The benchmark is priced as if you do not smoke:
"If the premium differs for tobacco users and non-tobacco users, the premium for the lowest cost silver plan is the premium that applies to non-tobacco users."
So the tobacco surcharge does not make your ICHRA unaffordable. It does not enter the test at all. You still pay it on the plan you actually buy. We measured that surcharge separately in our post on smoker and non-smoker premiums, where the median came out at 15% rather than the 50% the law allows.
How to check your own situation
Four numbers, in order.
- Find the lowest cost silver plan for self-only coverage in your rating area, at your age, priced as a non-smoker.
- Subtract the monthly allowance your employer is offering.
- Multiply your expected household income by 0.0996 and divide by 12.
- Compare. If step 2 is larger than step 3, the ICHRA is unaffordable and you may opt out.
If it is close, get it in writing from your employer before you decide. The allowance amount and the months it is available both feed the calculation.
What these numbers cannot tell you
This is a list-price panel for the 30 states in our filings. It does not include state-run exchanges, so several large states are absent.
It also holds self-only premiums, which is exactly what the affordability test needs, but not what a family pays. And it cannot know your household income, which is the other half of the test.
We are not giving tax advice here. We are publishing the benchmark price, because that is the input people cannot easily find.
Where these numbers come from
Source: Our own 2026 individual-market rate panel, built from the federal plan and rate filings we ingest and store.
Tables queried: rates, joined to plans for state, metal level and on-exchange variant.
Window: Plan year 2026, silver metal level, ages 21 to 64, non-tobacco premiums.
Records behind this page: 1,453 silver plan components priced across 349 rating areas in 30 states.
Queried: 2026-09-17.
Computed here, and published nowhere else:
- The lowest cost silver self-only premium in each of 349 rating areas, at each age, which is the exact benchmark the affordability test requires.
- The verification that all 1,453 silver components are Exchange-offered, so none are excluded from the benchmark.
- The count of rating areas where any ICHRA is affordable, by age and income. That is 51.6% of areas for a 25-year-old at $60,000, and 0% for a 60-year-old.
- The minimum allowance that makes an ICHRA affordable in the median and most expensive rating area.
- The within-state benchmark spread, including Florida's 2.3x range across its 67 rating areas.
Questions people ask
Can I take the ICHRA money and a subsidy at the same time?
No. If the ICHRA is affordable, you are not allowed the credit. If it is unaffordable, you may claim the credit only by opting out of the ICHRA entirely.
What counts as the benchmark plan?
The lowest cost silver plan for self-only coverage offered on the Exchange in the rating area where you live. Not the second lowest, which is the plan used for subsidy amounts.
Does it matter that I am covering my family?
Not for the test. The benchmark is self-only regardless of who you cover. It matters a great deal for what you actually spend.
What is the 2026 percentage?
9.96% of household income, set by Revenue Procedure 2025-25 for plan years beginning in 2026.
My employer offers a tiny allowance. Does that automatically make it unaffordable?
No, and this catches people out. In 180 of our 349 rating areas, a 25-year-old earning $60,000 fails the unaffordability test even with a $0 allowance. The benchmark there is already under 9.96% of that income.
Does the tobacco surcharge make my ICHRA unaffordable?
No. The regulation says the benchmark uses the non-tobacco price. The surcharge affects your actual premium but not the test.
Why is my older coworker allowed to opt out when I am not?
Because the benchmark is age-rated. The median benchmark in our panel is $492.83 at age 25 and $1,328.13 at age 60. The older worker's required contribution is much larger on the same allowance.
Is the subsidy still worth chasing in 2026?
It depends on your income. The rule that removed the 400% of poverty line limit applied to tax years 2021 through 2025. There is also no repayment cap after 2025, so an underestimate of income has to be repaid in full.
Where can I see the benchmark for my own county?
Rating areas are set by each state and usually group counties together. The state table above gives the range in your state. The cheapest and priciest areas within a state can differ by more than double.