ICHRA employee classes and how much your allowance may vary

Federal rules let an ICHRA allowance vary by age and by family size, and nothing else. Age variation is capped at three times. We checked 24,217 plan and rating-area combinations in the 2026 individual market. 18,471 of them price a 64-year-old at exactly three times a 21-year-old.

By Brett Spain · Published August 25, 2026 · Last updated August 25, 2026

The short version

You want to offer different people different amounts of money. That is allowed, but only in specific ways.

There are two separate levers, and people mix them up constantly.

The first lever is classes. You can split your workforce into groups and give each group a different allowance. The rules name eleven classes, and you may only use those.

The second lever is variation inside a class. Once you have set a class, everyone in it gets the same offer. There are exactly two exceptions: age and number of dependents.

That is the whole system. Everything else is a detail.

The eleven classes, in plain terms

A plan sponsor may treat people as a separate class based on whether they are, or are not, in one of these groups (26 CFR § 54.9802-4(d)(2)).

Notice what is not on that list. Not job title. Not department. Not tenure. Not performance. Not who costs the plan the most.

You also have to lock your classes in before the plan year. The regulation is explicit. Once the classes are set for a year, a sponsor "may not make changes to the classes of employees."

The same lock applies to how you defined each class.

The trap: minimum class size

Most people read the class list and stop. There is a second rule underneath it.

If you offer a traditional group plan to one group and an ICHRA to another, some ICHRA classes have to hit a minimum headcount.

The minimum depends on how big you are (§ 54.9802-4(d)(3)(iii)).

Three things make this rule less scary than it sounds.

It only applies if you are running a group plan and an ICHRA side by side. Offer only an ICHRA and it never comes up.

It never applies to the class getting the group plan, or to a class getting nothing.

And it only applies to five of the eleven classes: full-time, part-time, salaried, non-salaried, and same-rating-area.

Same terms, and the only two exceptions

Inside a class, the offer has to be the same for everyone. The rule is called the same terms requirement.

Two things are allowed to move it.

Family size. You may raise the allowance as the number of covered dependents goes up. Everyone in the class with the same number of dependents must get the same amount.

Age. You may raise the allowance as the participant gets older. Two conditions apply. Everyone the same age gets the same amount. And the amount for your oldest participant "is not more than three times the maximum dollar amount made available to the youngest participant(s)."

That is the 3x cap. It is a hard ceiling, not a guideline.

What the market actually charges by age

Here is where our own data comes in, because the 3x cap only matters if real premiums use it.

They do. Almost completely.

We hold the CMS Plan Year 2026 individual-market rate table: 1,235,067 rows covering 4,044 standard components across 67 rating areas, at every age from 14 to 64. That works out to 24,217 plan and rating-area cells at each age.

We took every one of those 24,217 cells and divided the age-64 premium by the age-21 premium in the same cell.

Zero cells exceed 3.0. The lowest ratio in the entire market is 2.9971, which is a rounding artifact rather than a real discount.

So the legal cap on allowance variation and the actual market price curve are the same number. If you set your oldest allowance at 3x your youngest, you are matching what carriers charge, right at the legal ceiling.

The age curve is not a straight line

This is the part that costs employers money when they get it wrong.

Because the ends are 1x and 3x, people assume the middle is smooth. It is not. Premiums stay nearly flat through the twenties, then bend sharply after 45.

Here is the median premium at each age, plus the median ratio to age 21 computed cell by cell.

Read the gap between 21 and 25. It is four tenths of one percent. A 25-year-old pays essentially what a 21-year-old pays.

Now read 55 to 64. That climbs from 2.230x to 3.000x in nine years.

An employer who splits the difference with a straight line from 1x to 3x will overpay for younger workers and underpay for older ones. The curve is flat early and steep late.

Geography moves the number too

Age is not the only thing driving the premium your employee actually faces. Where they live matters, and the same allowance buys very different coverage in different states.

We took the age-40 premium and found the median in each state in the loaded file. Thirty states are in it, all federally facilitated marketplace states.

The spread between the cheapest and most expensive state median is 2.38x. That is nearly as wide as the entire legal age range.

This is exactly why "employees whose primary site of employment is in the same rating area" is on the class list. It is the lever built for this problem.

Two levers, one design

Put the pieces together and the design space is small and clear.

If your idea does not fit in one of the first four rows, the rules do not have a path for it.

What we cannot tell you from this data

Honesty about the edges matters more than a tidy answer.

Our rate file holds individual premiums only. It cannot tell you what family coverage costs, so it cannot help you size the dependent variation.

It covers 30 federally facilitated marketplace states. State-based exchange states are not in this load, and some of them rate age differently.

And a premium is not an allowance. What you should offer depends on affordability testing and your budget. This data tells you what the market charges, not what you owe.

Data provenance

Source file: CMS Plan Year 2026 Individual Market Medical Rate PUF and Plan Attributes PUF, loaded into our rates and plans tables. Source URL: CMS Marketplace PUF

Records behind this page: 1,235,067 rate rows; 4,044 standard components; 67 rating areas; ages 14 to 64; 24,217 plan and rating-area cells per age; 30 states. Queried: 2026-08-25.

Computed here, and nowhere in the source file:

• The per-cell age-64 to age-21 premium ratio, and its distribution across all 24,217 cells.
• The per-cell median ratio to age 21 at each age.
• The state-level median age-40 premium spread.

Regulatory text quoted from 26 CFR § 54.9802-4, retrieved 2026-08-25.

Questions people ask

Can I give a bigger ICHRA allowance to older employees?

Yes. The allowance may rise with age, as long as everyone the same age gets the same amount. The oldest participant may not get more than three times the youngest.

Can I vary the allowance by job title or performance?

No. Neither is a permitted class. Neither is permitted variation inside a class. The eleven classes are the complete list.

Does the minimum class size rule always apply?

No. It applies only when you offer a traditional group health plan to one class and an ICHRA to another. It also only touches five of the eleven classes.

Can I change my classes mid-year?

No. Classes and their definitions are locked before the plan year and may not change during it.

Is the 3x age cap the same as the ACA age rating cap?

They are separate rules that happen to land on the same number. Our data shows 76.3% of 2026 plan and rating-area cells price age 64 at exactly 3.00x age 21, with none above it.

Can I vary the allowance by family size and by age at the same time?

Yes. They are listed as separate permitted variations, and neither one excludes the other.