The state is offering small businesses a new tax incentive worth up to $1,000 per employee annually to encourage more employers to provide health coverage as insurance costs continue to rise.
Access Health CT, the state’s health insurance marketplace, announced Monday that businesses with 50 or fewer employees can qualify for the credit when they offer an Individual Coverage Health Reimbursement Arrangement, or ICHRA, through the exchange’s BusinessPlus platform.
The state has made up to $5 million in tax credits available annually on a first-come, first-served basis. Access Health CT said the funding could potentially support credits for as many as 5,000 employees, depending on how many employers participate and how many workers are offered ICHRAs,
The credit is available for the first two consecutive years an eligible employer offers an ICHRA.
Unlike a traditional employer-sponsored group health plan, an ICHRA allows a business to provide employees with tax-free money they can use to buy their own individual health insurance coverage. Employers determine how much they will contribute toward employees’ coverage.
The new incentive comes as Connecticut businesses and consumers face another year of significant health insurance cost increases.
The state Insurance Department last week approved an average 15.1% rate increase for small-group health plans for 2027. Individual-market plans received an average approved increase of 11.3%.
Access Health CT said the ICHRA tax credit is intended to make offering health benefits more affordable for smaller employers that may otherwise struggle with the cost of traditional group coverage.
The incentive was proposed by Gov. Ned Lamont and approved by the General Assembly during the 2026 legislative session.
Eligible businesses must offer their ICHRA through Access Health CT’s BusinessPlus platform to qualify. The credit is tied to employer contributions toward workers’ coverage and is capped at $1,000 per employee per year.
