Lamont Proposes Small Business Health Plan Tax Credit

As Connecticut lawmakers pursue more options to help small businesses access affordable employee healthcare plans, they are drawing some inspiration from federal policy initiatives.

At the beginning of the legislative session, Gov. Ned Lamont proposed a new tax credit for small employers that offer employees individual coverage health reimbursement arrangements.

Known as ICHRAs—and first established in 2017 through a Trump administration executive order—the arrangements allow states to offer tax credits to businesses that help employees enroll in Affordable Care Act health plans.

Connecticut is among a number of states that have either enacted or are reviewing legislation enabling the adoption or expansion of ICHRAs.

The governor’s proposal—HB 5041—provides employers with a two-year tax credit of up to $1,000 annually per employee for ICHRAs administered through the state-run health insurance exchange.

HB 5041 is awaiting action by the General Assembly’s Human Services Committee.

Options, Flexibility

CBIA policy director Grace Brangwynne said ICHRAs provide another option for small businesses, particularly those that do not offer employee plans or struggle to find or maintain traditional group coverage.

“ICHRAs give employers additional flexibility in how they structure and finance health coverage for their employees,” she said.

“And while ICHRAs allow employers to have flexibility in contributions, they do shift the responsibility of finding healthcare to the employee.”

ICHRAs provide another option for small businesses, particularly those that do not offer employee plans.

Indiana was the first state to enact ICHRA legislation, with that 2023 law now a model for other states.

The expiration for federal ACA subsidies last year has also drawn more attention to ICHRAs.

“There’s not much middle ground left in Washington,” Lamont told POLITICO. “This is a piece that has some bipartisan buy-in.”

‘Bargaining Power’

Healthcare costs are one of the major challenges for small employers in Connecticut, with the rapidly shrinking small group market limiting accessibility and driving up costs.

Over 50 small businesses, nonprofit organizations, and chambers of commerce this week urged lawmakers to approve legislation addressing the lack of health insurance options.

They testified before the legislature’s Insurance and Real Estate Committee March 3 in support of HB 5378.

“#Smallbusinesses are crying for help, and we need a solution now.” CBIA’s Grace Brangwynne joins @1490WGCH to talk solutions to soaring #healthcare costs being debated this legislative session. “The best option is to have more options.”#reimagineCT pic.twitter.com/f1Z445TeNu

— CBIA (@CBIANews) February 19, 2026

The bill allows small businesses to pool their risk and purchase health insurance through a trade association or local chamber of commerce.

Brangwynne told lawmakers the bill gives small businesses more bargaining power, more stable pricing, and a range of plan options that fit the needs of their employees.

“Employers are being forced to choose between raising prices, cutting staff, reducing benefits, or dropping coverage entirely,” she said.

“For many, this is not a future problem—it is a right‑now emergency.”

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For more information, contact CBIA’s Grace Brangwynne (860.244.1163).