How much does an ICHRA cost for Illinois employers?

ICHRA costs in Illinois depend on the monthly allowance you set. There is no IRS maximum. The average Illinois marketplace silver plan costs $555/month for individuals, so most employers offer between $300-$800/month. Total cost = allowance x employees x 12 months, plus $5-$15/month admin fees.

What is the ACA employer mandate penalty in 2026?

For 2026, the 4980H(a) penalty is $2,970 per FTE per year (applied to total FTEs minus 30) for not offering minimum essential coverage. The 4980H(b) penalty is $4,460 per employee who receives a marketplace subsidy when the employer's coverage is unaffordable or inadequate.

Is ICHRA a good alternative to group health insurance in Illinois?

Illinois has a competitive marketplace with multiple carriers, especially in the Chicago metro area. ICHRA works well for employers seeking alternatives to group plans. The average employer group plan in Illinois costs approximately $710/month per employee. ICHRA adoption in Illinois is strong.

Can paying the ACA penalty be cheaper than offering coverage in Illinois?

For some Illinois employers, the 4980H(a) penalty ($2,970/FTE minus 30 FTE buffer) can be significantly less than group plan or ICHRA costs. However, paying the penalty means offering no benefits — impacting recruitment, retention, and employee satisfaction. This calculator models all four paths so you can make an informed decision.

Illinois ICHRA Cost-Benefit Calculator

Compare ICHRA vs group health insurance vs ACA employer mandate penalties for Illinois employers. Find the most cost-efficient benefits path with state-specific marketplace data.

Free • No Login • 2026 Illinois Market Data • Penalty Analysis Included

Step 1 — Your Illinois Company

Company size determines ACA employer mandate applicability (50+ FTEs). Location affects marketplace premium costs and penalty exposure.

Number of Full-Time Equivalents (FTEs) ?Total full-time equivalent employees. The ACA employer mandate applies to "applicable large employers" with 50+ FTEs. FTEs include full-time employees (30+ hrs/week) plus part-time hours divided by 120/month.Source: IRS Section 4980H; 26 CFR 54.4980H

Employees Eligible for Benefits ?Number of employees you plan to offer benefits to. This may be equal to or less than total FTEs depending on waiting periods and eligibility rules.Source: ERISA Section 3; IRS Final Rules on ICHRAs

Average Employee Age 38 ?Average age of your workforce. ACA marketplace plans use a 3:1 age rating curve — a 64-year-old pays up to 3x a 21-year-old. This affects marketplace premiums and ICHRA effectiveness.Source: CMS Federal Age Curve; ACA 3:1 Rating Band

Average Household Income ?Used for ACA affordability test. The employee's required contribution for self-only silver coverage cannot exceed 9.02% of household income for the ICHRA to be "affordable."Source: IRS Rev. Proc. 2024-35; ACA Section 36B

Currently Offering Group Coverage?

Current Monthly Employer Cost PEPM ($) ?Per-employee-per-month cost your employer currently pays for group health insurance. Illinois average is approximately $710/month.Source: KFF 2025 EHBS; Illinois market data

Step 2 — ICHRA Modeling

Design your ICHRA allowance. In Illinois, the average silver plan costs $555/month (individual) — set your allowance accordingly.

Monthly ICHRA Allowance per Employee ($) $500 ?Monthly tax-free reimbursement for individual insurance premiums. No IRS maximum for ICHRA. Most employers offer $300-$800/month. Illinois silver plan avg: $555/mo.Source: IRS Final Rules, 84 FR 28888

Monthly Family Allowance ($) $1200 ?Monthly allowance for employees with family coverage. Illinois average family plan: $1500/mo.Source: CMS 2026 Marketplace Data

Admin Fee PEPM ($) $8 ?Third-party administrator fee per employee per month. Typical range: $5-$15/mo. Covers claims processing, compliance, and employee support.Source: HRA Council 2025 Benchmarks

Expected Employee Opt-In Rate 85% ?Percentage of eligible employees expected to enroll in the ICHRA. National average is 80-90%. Employees may opt out to keep marketplace subsidies if ICHRA is unaffordable.Source: HRA Council 2025 Data

Step 3 — ACA Penalty Analysis (Section 4980H)

For applicable large employers (50+ FTEs), the ACA imposes penalties for not offering qualifying coverage. This section calculates your penalty exposure to compare against ICHRA and group plan costs.

4980H(a) Penalty per FTE (2026) ?The "sledgehammer" penalty for not offering minimum essential coverage to at least 95% of FTEs. Applied to ALL FTEs minus 30. $2,970/FTE for 2026 (indexed annually).Source: IRS Section 4980H(a); Rev. Proc. 2024-35

4980H(b) Penalty per Subsidized EE (2026) ?The "tack hammer" penalty when coverage is offered but is unaffordable or doesn't meet minimum value. Applied per employee who receives a marketplace premium tax credit. $4,460/employee for 2026.Source: IRS Section 4980H(b); Rev. Proc. 2024-35

Est. % Employees Eligible for Marketplace Subsidies 30% ?If you don't offer coverage (or offer unaffordable coverage), this percentage of employees is estimated to qualify for premium tax credits on the Illinois marketplace. Based on Illinois income demographics and household composition data.Source: KFF Subsidy Calculator; Illinois Census Data

Cost-Benefit Analysis — 4 Paths Compared

Side-by-Side Comparison

Path	Annual Cost	vs Current	Risk Level	Notes

Risk Assessment by Path

3-Year Cost Projection

Employee Perspective: ICHRA Allowance vs Illinois Marketplace

Est. Illinois Silver Plan Premium (Self-Only)

Based on age + Illinois market index

Employee Out-of-Pocket (After ICHRA)

Monthly gap or surplus

ACA Affordability Check

Illinois Marketplace Insights

Marketplace Type: FFM (Federally Facilitated)

State Cost Index: 1.02 (above national avg — higher allowances may be needed)

Avg Silver Premium (Individual): $555/mo | Family: $1500/mo

Avg Employer Group Premium: $710/mo

ICHRA Adoption: Strong

Top ICHRA Administrators: Take Command, PeopleKeep, Venteur

State Rules: No additional state ICHRA regulations beyond federal

Illinois has a competitive marketplace with multiple carriers, especially in the Chicago metro area. ICHRA works well for employers seeking alternatives to group plans.

ICHRA Cost Calculation: Monthly allowance x eligible employees x opt-in rate x 12 months, plus admin fees (PEPM x eligible x 12). Age and family variations are supported per IRS Final Rules (84 FR 28888).

Group Plan Cost: Current PEPM x eligible employees x 12 months. Projected at 8% annual increase (KFF 2025 EHBS historical trend).

4980H(a) Penalty: $2,970 x (total FTEs - 30) for 2026. Applies when an ALE fails to offer MEC to at least 95% of full-time employees. The 30-FTE buffer is statutory.

4980H(b) Penalty: $4,460 x number of full-time employees who receive marketplace premium tax credits. Applies when coverage is offered but is unaffordable (exceeds 9.02% of household income) or fails minimum value (covers less than 60% of costs).

Hybrid Path: Pay the 4980H(b) penalty + offer a minimal ICHRA. This models the cost of offering an ICHRA that doesn't meet affordability for all employees, resulting in some employees claiming marketplace subsidies and triggering 4980H(b) penalties.

Marketplace Premium Estimates: CMS 2026 baseline of $496/month for a 40-year-old, adjusted by Illinois cost index (1.02) and CMS federal age curve factors.

ACA Affordability Test: Per IRS Notice 2024-55, ICHRA is "affordable" if (lowest-cost silver plan - ICHRA allowance) does not exceed 9.02% of household income / 12.

Projection Assumptions: Group plan: 8%/yr increase. ICHRA: 3%/yr employer adjustment. Penalties: 2%/yr CPI indexing. These align with historical trends from KFF and IRS published data.

Data Sources: IRS Section 4980H & Rev. Proc. 2024-35 (penalty amounts), IRS Final Rules 84 FR 28888 (ICHRA), IRS Notice 2024-55 (affordability), CMS 2026 Marketplace Premium Data, KFF 2025 Employer Health Benefits Survey, HRA Council 2025 Benchmarks, Illinois Department of Insurance marketplace data.

Built on IRS Rules, CMS Data & ACA Penalty Schedules

This calculator uses official 2026 penalty amounts, Illinois marketplace premiums, and published employer cost data.

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IRS Section 4980H

ACA employer mandate penalties — $2,970 (a) and $4,460 (b) for 2026, indexed annually per Rev. Proc. 2024-35

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IRS Notice 2020-36

ICHRA Final Rule establishing individual coverage HRAs, employee class rules, and affordability safe harbors

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CMS Marketplace Data

2026 Illinois benchmark silver plan premiums by age from Healthcare.gov

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KFF Employer Survey

2025 national and regional benchmarks for group premiums, employer contributions, and renewal trends

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