ICHRA vs group health insurance for employers with 50 or more employees in 2027

Educational exploration, not advice. Dollar figures on this page are illustrative estimates built from public data. They aren't quotes, and they aren't tax, legal or insurance advice. Your own numbers will differ.

Summary of the 2027 numbers

• The rule: an employee can’t be asked to pay more than $135.93 a month for your cheapest self-only option. The same rule applies to a group plan and an ICHRA.
• Offer nothing: $3,780 a year for each full-time employee, minus the first 30.
• Group plan: an estimated $748 a month per enrolled employee, at any age, on an average-priced plan.
• ICHRA: an estimated $527 to $1,580 a month per enrolled employee in Bell County, Texas, depending on age, for a class that runs from 21 to 64.
• Crossover age: in this illustrative estimate, the ICHRA minimum is lower than the group plan minimum for employees up to about age 46 and higher after that. Your crew’s age mix determines which one comes out lower overall.

Run the numbers for your own crew.

The 2027 affordability rule

If you average 50 or more full-time employees, counting full-time equivalents, the IRS treats you as an applicable large employer. You have to offer your full-time employees coverage that’s affordable and meets minimum value, or risk a penalty. Confirm how this applies to you with your tax advisor or attorney.

For plan years that start in 2027, coverage is affordable if the employee’s cost for your cheapest self-only option is no more than 10.22% of household income. Because you don’t know anyone’s household income, the IRS lets you use one of three safe harbors instead: W-2 wages, rate of pay, or the federal poverty line.

The federal poverty line safe harbor is the simplest to use. For a calendar-year 2027 plan, 10.22% of $15,960, divided by 12, is $135.93 a month. For anyone earning more than about $10.25 an hour, it’s also the lowest of the three caps. Confirm which safe harbor fits your situation with your tax advisor or attorney.

The same $135.93 applies to a group plan and an ICHRA. For a group plan, it’s measured against your cheapest employee-only premium. For an ICHRA, it’s measured against the cheapest silver plan for each employee, minus your allowance.

The three options side by side

These are minimums for employee-only coverage, and you can contribute more. KFF found the average worker paid $1,672 a year toward single coverage in 2026, about $139 a month, which is close to the $135.93 safe harbor.

Option 1: offer nothing

If you don’t offer coverage, the penalty is $3,780 a year for each full-time employee, and the first 30 aren’t counted. It applies once a single full-time employee buys Marketplace coverage with a premium tax credit. Illustrative penalty math:

• 50 full-time employees: $75,600 a year
• 100 full-time employees: $264,600 a year
• 250 full-time employees: $831,600 a year

If you offer coverage that isn’t affordable or doesn’t meet minimum value, the penalty is $5,670 for each full-time employee who gets a subsidy, capped at the no-offer amount.

The penalty can be lower than the cost of a group plan or an ICHRA, and paying it provides no coverage for any of your employees.

Option 2: a group plan

With a group plan, you pay the premium minus the employee’s share. At the federal poverty line safe harbor, you cover everything above $135.93 on your cheapest employee-only plan.

No 2027 average has been published yet. The illustrative estimate below uses 2026 survey data and a 2027 projection:

• KFF’s 2026 average single premium was $9,804 a year, or $817 a month.
• Marsh (formerly Mercer) projects employer health costs per employee will rise 8.2% in 2027, after the changes employers plan to make. Without those changes, employers expected 11%.
• $817 plus 8.2% is about $884 a month. Minus the $135.93 cap, the estimated minimum share is about $748 a month per enrolled employee.

In a large group, which is 51 or more employees in Texas, there’s usually one rate per coverage tier, whatever the employee’s age. Your group’s age mix is reflected in your renewal rather than in each employee’s rate.

If you have your 2027 renewal, enter it in the calculator below in place of the national estimate.

Option 3: an ICHRA

With an ICHRA, you give each employee a monthly allowance and they buy their own individual plan. It’s affordable if the cheapest silver plan for that employee, minus your allowance, comes to $135.93 or less.

The ICHRA calculation depends on three rules:

• Age. Individual plans are priced by age on a curve that runs 3 to 1 from 21 to 64. ICHRA rules let you scale the allowance by age, but within a class the oldest person’s allowance can be at most 3 times the youngest’s. Use each employee’s age on the first day of the plan year.
• Place. You can price the test where the employee works instead of where they live.
• Last year’s prices. Under the IRS’s proposed ICHRA rules, a calendar-year ICHRA can use the cheapest silver premium from January of the prior year. For a 2027 plan year, you use 2026 prices.

In Bell County, the cheapest silver plan for a 40-year-old in 2026 was $731 a month. The other ages below use the CMS default age curve, which Texas uses. The minimum allowance column assumes one class of employees that runs from 21 to 64. The 2027 column is an illustrative estimate.

The youngest allowances are set above their own affordable minimum because of the 3 to 1 limit. Each affordable minimum is the silver price minus the same $135.93, so on their own they spread wider than 3 to 1 ($436 at 21 against $1,580 at 64 is about 3.6 to 1). To keep your 64-year-olds affordable inside the 3 to 1 limit, nobody in the class can get less than $1,580 divided by 3, or $527 a month. If your oldest employee is younger, the floor is lower.

The last two columns show the effect of the look-back rule. The allowance is set on 2026 prices, and your employees buy coverage at 2027 prices. Texas individual market insurers filed for an average increase of about 14.1% for 2027 (preliminary), and nationally the median proposed increase was about 15%. At the minimum allowance, your offer still meets the affordability test, and most of your employees would pay more than $135.93 a month.

Two more points to consider before you choose an ICHRA:

• Scale the allowance by age. A single flat allowance has to be high enough for your oldest employee. In Bell County, that’s about $1,580 a month for every employee in the class, including your youngest.
• Check the networks. Bell County’s 2026 individual silver plans were HMOs, EPOs and POS plans from four insurers. If your crew travels for work, check each plan’s network along with its price.

The crossover age

One employee at a time, the illustrative ICHRA minimum stays below the group plan’s estimated $748 through about age 46. At 47 it’s higher, and by 60 it’s nearly double.

Your total cost depends on the age mix of the whole group. The table below is an illustrative estimate for the same 60 enrolled employees with three different age mixes. Each age group is priced at the average of its ages on the curve, and the youngest allowances are raised to meet the 3 to 1 limit.

In this illustrative estimate, a typical spread came out close to even. A younger crew came out about $47,000 a year lower with an ICHRA, and an older crew came out about $141,000 a year higher. For comparison, the modeled penalty for offering nothing to 60 full-time employees would be $113,400 a year, with no coverage for any employee.

Run it for your crew

Enter your own headcount by age, your county’s cheapest silver premium for a 40-year-old, and your group renewal if you have one. The results are illustrative estimates, not a quote.

Limits of these estimates

• Your employees’ real cost. These are minimums at the safe harbor. At the minimum allowance, a 40-year-old in Bell County pays an estimated $239 a month in 2027, compared with the $135.93 safe harbor amount.
• Your renewal. The group figure is a national average plus a projection. Your plan is priced on your group.
• Networks and plan design. Networks and plan design affect what employees pay when they use care, so compare them along with price.
• Competitive contribution levels. These figures are compliance minimums. The amount needed to compete for workers may be higher.
• Your tax and legal answer. This page is educational exploration with illustrative estimates from public data, not tax, legal or insurance advice. Check the details with your tax advisor or attorney before you choose.

What is the ACA affordability threshold for 2027?

The threshold is 10.22% of household income for plan years that start in 2027, up from 9.96% in 2026. Under the federal poverty line safe harbor, that works out to $135.93 a month for an employee’s cheapest self-only option on a calendar-year 2027 plan. The same number applies to group plans and ICHRAs.

Is an ICHRA cheaper than a group plan?

It depends on your crew’s ages. In an illustrative Bell County, Texas estimate, the minimum ICHRA allowance is lower than the minimum share of an average group plan for employees up to about age 46, and higher after that. For a 60-person crew with a typical age spread, the two modeled minimums came out within about 1% of each other. In the same illustrative estimate, a younger crew came out about $47,000 a year lower with an ICHRA, and an older crew came out about $141,000 a year higher. These are educational estimates from public data, not a quote or advice.

What is the penalty for not offering health insurance in 2027?

For an employer with 50 or more full-time employees, counting equivalents, it’s $3,780 a year for each full-time employee, minus the first 30, once one full-time employee gets subsidized Marketplace coverage. If you offer coverage that isn’t affordable or doesn’t meet minimum value, it’s $5,670 for each full-time employee who gets a subsidy, capped at the no-offer amount.

Which year's silver premiums do I use for a 2027 ICHRA?

For a calendar-year ICHRA, the IRS’s proposed ICHRA rules let you use the cheapest silver premium from January of the prior year, so 2026 prices for a 2027 plan year. Non-calendar plan years use January of the current year. You can also price it at the employee’s primary work site instead of their home.

Can an ICHRA allowance vary by age?

Yes, within limits. Within a class of employees, the allowance can rise with age, but the oldest participant’s allowance can be at most 3 times the youngest’s. The affordable minimum is the silver price minus the same $135.93 for everyone, so the minimums spread wider than 3 to 1 and the youngest allowances usually have to be raised. In the illustrative Bell County estimate, a class that includes a 64-year-old needs at least about $527 a month for everyone. A single flat allowance has to cover your oldest employee’s cost, so every employee in the class gets that higher amount.

How much are ACA premiums going up in 2027?

Individual market insurers proposed a median increase of about 15% nationally for 2027, according to KFF’s review of 276 insurers. In Texas, filed individual market rates averaged about 14.1% (preliminary). Small group insurers proposed a median of about 14%.