Connecticut has opened a new tax credit intended to help small employers contribute to workers’ health insurance, offering eligible businesses as much as $1,000 per covered employee each year for two consecutive years.
Gov. Ned Lamont announced the credit’s availability Wednesday, saying businesses with 50 or fewer Connecticut employees may qualify when they establish an Individual Coverage Health Reimbursement Arrangement through Access Health CT’s BusinessPlus platform. The arrangement lets an employer set a monthly contribution while the employee selects an individual-market plan through the state exchange.
The credit is capped at the smaller of the employer’s qualified contributions or $1,000 per covered employee. A Connecticut General Assembly summary of 2026 legislation says it can be applied against several state levies, including the corporation business tax, personal income tax and taxes on insurers and health care centers. The law applies to tax years beginning on or after Jan. 1, 2026.
The statewide pool is limited to $5 million in a tax year. Access Health CT said applications will be handled on a first-come, first-served basis, making timing relevant for employers considering the option. The Department of Revenue Services has placed the application among its current pass-through entity tax forms.
An ICHRA differs from a traditional group plan. Instead of buying one policy for the workforce, an employer promises a defined contribution that eligible employees use toward individual coverage. That structure can make the employer’s cost more predictable and give workers a choice among marketplace plans, but the tax credit does not itself fix premiums or guarantee that every available plan will be affordable.
The policy emerged after small employers described difficulty sustaining conventional group coverage. During the proposal’s legislative debate, the Connecticut Mirror reported that business advocates expected the credit to be most useful to firms with 10 or fewer employees, while one Waterbury manufacturer said rising premiums and low participation had ended its earlier group plan.
The design also limits the state’s exposure and ties the benefit to money actually spent on coverage. A company cannot claim the full $1,000 for a worker if its qualified annual contribution is lower. Conversely, contributions above that amount do not increase the per-worker credit. The $5 million statewide ceiling could also constrain participation if demand is strong.
For employers, the immediate decision is practical: whether a defined monthly contribution, combined with the state credit, is preferable to offering a conventional group policy or no employer-funded coverage. The program is an incentive rather than a mandate, and the two-year limit means participating businesses will need to evaluate the full cost after the credit expires.
Access Health CT says its BusinessPlus office and certified broker network can help employers compare options. Businesses must still meet the eligibility rules, establish the arrangement and obtain approval before claiming the credit; the state’s announcement does not turn the headline maximum into an automatic payment.
