What real enrollee data shows about ICHRA value vs. ACA premium tax credits
80% of small-business workers get more value from their ICHRA than if they received an ACA premium tax credit.*
The bottom line
Critics of ICHRA argue that giving employees a defined contribution to buy their own coverage leaves them worse off than if they received an ACA premium tax credit (PTC). This report examines this argument from the perspective of workers at small businesses with fewer than fifty employees–the focus of federal and state policies aimed at accelerating ICHRA adoption. Looking at enrollment data on Thatch’s platform, we compared each employee’s actual 2026 ICHRA allowance against the real PTC available to them. For 80% of these workers, the ICHRA is the more generous option.
Who benefits most
The ICHRA advantage is strongest, and most consistent, in three groups:
Single workers (74% of the sample): 88% save more with an ICHRA. Their benchmark silver premium is low relative to income, so the credit they would get is small ($175/month is the median), while a median allowance of about $450/month comfortably exceeds it.
Younger workers: 89% of workers under 30 do better with an ICHRA than a PTC. The advantage narrows with age as age-rated premiums rise, but a majority still benefit through age 64.
Workers above 200% of the federal poverty line (FPL): the credit shrinks as income rises, so ICHRA wins 89% of the time in the 300–400% FPL range.
In every state represented in our sample, ICHRA is the better deal for most workers. From 69% of workers in Tennessee to 94% in Oregon.
Fig. 1: % of in-band employees where ICHRA beats real PTC, by state (n ≥ 30)
Fig. 2: Dollar gap between ICHRA allowance and real PTC, in-band employees (n=2,772)
The minority who could still choose the marketplace
For the 20% of employees where the credit would be larger, the picture splits in half once ACA affordability rules are applied. An employee may claim a PTC only if their employer’s ICHRA offer is unaffordable, meaning the employee’s share of the cheapest silver plan, after the allowance, exceeds an income-based threshold. Applying that test to this group:
About half have an offer that is affordable, so they cannot claim the credit. In population terms, this is roughly 10% of all in-band employees.
The other half, roughly 10% of all in-band employees, have an unaffordable offer and a real choice: they can decline the ICHRA and access the PTC if they are otherwise eligible. The marketplace backstop works exactly as designed for them.
Why employer contributions are not required to match the credit
The PTC is a backstop to employer-sponsored coverage, not a primary entitlement. Federal law does not require any employer, whether offering an ICHRA or a traditional group plan, to contribute a specific dollar amount to their employees’ health coverage. Instead, the ACA applies an income-based affordability test that serves as (1) a gate for PTC eligibility and (2) a benchmark for employer-shared-responsibility rules applicable to large employers (26 U.S.C. § 36B(c)(2)(C)(i); 26 U.S.C. § 4980H). Because affordability is measured as a share of income rather than a fixed dollar floor, the ACA’s design steers the most support–whether from the employer or the government–to the lowest-paid workers.
Where there is room to improve, and what we are doing
The cases where the PTC outvalues ICHRA are not spread evenly. They concentrate in a small number of employers, including a handful of very small firms that set every worker’s allowance well below the credit available in their region.
This matters because of how the rules interact. An ICHRA that the IRS deems affordable makes the worker ineligible for a PTC. So an employer who funds a low allowance that still clears the affordability line can leave employees with neither a generous benefit nor access to the larger credit they would otherwise have claimed. That is the worst outcome for a worker, and it is the one we want to design out of the market.
Actions we’re taking in response to this analysis:
Identifying employers whose allowances fall below the regional benchmark credit and flagging them for targeted outreach.
Building the affordability-and-credit comparison into the employer experience, so employers see how a low allowance can cost their workers a larger marketplace credit before they finalize funding.
Publishing funding guidance that helps small employers set allowances at levels that genuinely benefit their workforce.
Why this matters for the policy conversation
This is real-world evidence: actual ICHRA allowances and actual PTC amounts for thousands of working people. It shows that ICHRA is already delivering more value than the subsidized marketplace for the large majority of the workers using it, while giving us a clear read on the minority of cases that need attention. Smart policy can widen the win rate further by strengthening employer funding incentives and the transparency tools that surround them.
For questions about this analysis, contact Thatch’s Head of Policy, Bruce Johnson, at bruce@thatch.com.
* Population: 2,772 employees of small employers (50 or fewer workers) whose self-reported 2026 household income falls in the 100–400% FPL PTC-eligibility band. Workers in Medicaid expansion states below 138% FPL are excluded. Household size reflects dependents enrolled on the plan and may understate the full tax household, a conservative assumption for the credit.
