You can generally decline an ICHRA. Your employer is required to give you the chance to opt out at least once a year, and also when you first become eligible. Here's how to think about it.
Reasons people opt out
- The Premium Tax Credit is bigger than the allowance. Only possible if your ICHRA is "unaffordable" under the IRS test. See the affordability guide.
- You're covered under a spouse's employer plan and it's a better deal. A spouse's group plan generally doesn't qualify for ICHRA reimbursement, so you'd be choosing between the two.
- You have Medicaid, TRICARE, or other coverage that doesn't qualify for reimbursement and works for you.
Reasons people regret opting out
- They assumed they'd get a tax credit, but the ICHRA was affordable — so they got neither.
- They opted out for a spouse's plan without checking the family allowance, which would have covered the whole household on an individual plan for less.
- They didn't realize opting out is typically locked in for the plan year.
How it typically works
- Your employer sends the ICHRA notice (generally at least 90 days before the plan year starts, or when you're hired).
- The notice or enrollment form includes an opt-out election. You sign it — or you don't.
- If you opt out, no reimbursements are made for the year. You're free to buy coverage anywhere, including with a tax credit if you qualify.
- Next year, you get the choice again.
Mid-year changes
If your circumstances change — a marriage, a new baby, a big change in income — you can generally opt out (or back in) at that point too, and the change may open a Special Enrollment Period on the Marketplace. Talk to HR or your administrator before making a move.
Don't decide on vibes
Opting out is a math problem, not a feeling. Run the
affordability check and compare actual dollar amounts before you sign anything.