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SB 3123

Income tax; allow credit to employer providing individual coverage health reimbursement arrangement (ICHRA) to employees.

2025 Regular Session

SB 3123 would create a state income tax credit for employers that provide an ICHRA to employees, aiming to expand coverage by encouraging employer reimbursements.

Died In Committee
#finance
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WeVote Research Nonpartisan
Bill Summary · SB 3123

Summary of SB 3123 — Income tax credit for employers providing ICHRA to employees

Overview

SB 3123 proposes a state-level income tax credit for employers that provide an Individual Coverage Health Reimbursement Arrangement (ICHRA) to their employees. The bill is categorized under finance and would be aimed at incentivizing employers to offer ICHRA-based health coverage to workers.

Purpose and intent

  • To incentivize employers to implement ICHRA offerings by providing an income tax credit.
  • By encouraging employer reimbursement arrangements for individual health insurance, the bill seeks to expand access to coverage and potentially reduce out-of-pocket costs for employees.

Key provisions (high-level; text not provided)

  • The bill would create an income tax credit for employers that provide an ICHRA to employees.
  • Specific details such as:
    • Credit amount (percent of eligible costs, flat amount, or other basis)
    • Eligibility criteria (business size, industry, ongoing compliance requirements)
    • Maximum credit and carryforward/recapture provisions
    • Interaction with other tax credits or deductions
    • Any limitations related to employees’ ACA subsidies or coverage requirements
    • Compliance, reporting, and verification mechanisms
  • Note: The exact structure, caps, eligibility thresholds, and administration details would be defined in the bill’s full text, which is not provided here.

Affected parties

  • Primary: Employers that offer an ICHRA to their employees.
  • Employees: Recipients of ICHRA reimbursements, whose health coverage would be subsidized through the employer’s arrangement.
  • Government/Tax Administration: State tax authorities responsible for administering the credit and ensuring compliance.

Procedural and timeline context

  • Introduced: February 24, 2025.
  • Referred to Finance: February 24, 2025.
  • Died in Committee: February 26, 2025.
  • Status: Died in Committee, meaning the bill did not advance out of the committee process in its current form.

Potential impact (if enacted)

  • Employers offering ICHRA could reduce their net state income tax liability through the credit.
  • Employees might benefit indirectly via broader adoption of ICHRA, potentially increasing access to individual coverage.
  • Fiscal impact would depend on credit size, eligibility, and uptake, as well as interactions with existing federal and state health coverage programs.

Open questions (without the full text)

  • What is the exact credit amount and structure (refundable vs. nonrefundable)?
  • Which employers are eligible (size thresholds, sectors, or other criteria)?
  • How does the credit interact with other tax provisions and with employees’ federal subsidies?
  • Are there annual cap limits or sunset provisions?

Future considerations

If reintroduced in a future session, lawmakers may address credit details, eligibility rules, and potential fiscal impacts to improve clarity and implementation viability.

Compiled from official sources — confirm details with the bill’s official record.

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