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States that want to provide tax breaks for employers with individual coverage health reimbursement arrange plans now have a template.
Members of the National Council of Insurance Legislators have adopted a model bill that can help states create state income tax credits for ICHRA plan sponsors.
NCOIL is a Belmar, New Jersey-based group for state legislators who have an interest in insurance.
An ICHRA plan is an arrangement that lets workers use cash from their employers to buy their own individual or family health coverage.
A state that used the model as written would make the tax credit available to employers that are too small to be subject to the Affordable Care Act "play or pay" health coverage requirements.
A lawmaker who introduced the bill would set the size of the proposed tax credit by filling in blanks in the model.
The model would outlaw some types of ICHRA sales and marketing activities, such as efforts to steer an individual from an existing employer-sponsored health plan to an ICHRA plan, as an "unfair and deceptive practice."
Two states, Indiana and Mississippi, already offer tax incentives for ICHRA sponsors.
Ohio state Rep. Meredith Craig, R-Smithville, Ohio, is an NCOIL member. She has introduced an ICHRA tax credit bill in her state, Ohio House Bill 133, and she proposed that NCOIL adopt an edited version of the bill as a model.
"This concept has bipartisan support at both the state and federal levels," Craig said in a comment about NCOIL adoption of the model. "It enables flexibility for both employers and employees when it comes to health coverage."
What it means: ICHRA plan service providers say 2026 sales have been strong, but hard numbers about ICHRA plan adoption are hard to find.
Successful efforts to persuade more states to adopt state ICHRA income tax credits could give ICHRA plan sales efforts a boost when employers are shopping for benefits for 2027 and later years.
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