Opt-out credit repricing for 2027 starts with your waiver rate
The expiration of enhanced ACA premium tax credits removed the cheap landing spot employees used when they waived coverage, and most opt-out credits and spousal surcharges were never repriced for it.
Opt-out credit repricing for 2027 is the least glamorous line item in your benefits budget and probably the most mispriced. Every waiver incentive on your books, the cash credit for declining coverage, the spousal surcharge, the working-spouse exclusion, was designed around an assumption that quietly stopped being true on January 1, 2026: that an employee who waived your plan had a cheap subsidized exchange plan waiting. That assumption is gone, and 2027 open enrollment is the first cycle where you have real behavioral data to price against.
What changed when the enhanced subsidies lapsed
The enhanced ACA premium tax credits expired December 31, 2025, with effect for coverage beginning January 2026, as Conner Strong flagged in its December 2025 legislative update. The numbers behind that sentence are larger than the sentence suggests. KFF data cited by Fidelity's Learning Center found that subsidized marketplace consumers saw their out-of-pocket premium payments rise roughly 114% on average as the enhancement rolled off, against an increase of about 26% in overall insurer premiums for 2026.
Second-order pricing made it worse. Remodel Health's September 2026 analysis estimates the sunset itself added an additional 2% to 7% to 2026 individual market premiums, as insurers priced in reduced enrollment and a worse risk pool. The Commonwealth Fund projected in October 2025 that close to 5 million people could lose coverage in 2026 absent congressional action. Conner Strong was explicit about the employer consequence, warning plan sponsors that higher individual market premiums could push workers back toward employer coverage.
That is the competitive pressure most benefits budgets did not model. 2026 was the absorption year, when employees discovered what their alternative actually costs. 2027 is the year that discovery shows up in your enrollment counts.
You budgeted the opt-out credit line as savings. Post-subsidy, it is often pure expense paying for behavior you would have gotten for free.
Why opt-out credits flip from savings to cost
An opt-out credit only generates savings if it changes someone's decision. You pay a few hundred or a few thousand dollars to avoid a per-employee-per-month claims and premium exposure that is substantially larger. The math works when a meaningful population was on the fence and the credit tipped them off your plan.
Now the fence has moved. Employees who were marginal waivers in 2024 are enrollers in 2026 and 2027, because the subsidized plan they left for is no longer cheap. Two things happen at once. Your covered population grows, driving up total plan cost. And the credits you still pay to the shrinking group of committed waivers, typically people on a spouse's plan or military coverage, become pure expense with no avoided-cost offset, because those people were never going to enroll anyway. You budgeted the credit line as savings. It is now subsidizing behavior you would have gotten for free.
Spousal surcharges that push nowhere
Spousal surcharges and working-spouse exclusions run on the same logic and break the same way. The design intent is to move a dependent to another available plan, usually the spouse's own employer coverage. That intent still works where the spouse has a real employer option. It stops working in households where the realistic alternative was the exchange.
The Congressional Research Service (R48290) confirms the structural rule underneath all of this: enrollment in an employer-sponsored plan generally makes an individual ineligible for the premium tax credit. That is the hinge connecting waiver design, surcharge design and ICHRA math. When the credit was enhanced, the exchange was a genuine destination. Post-sunset, a surcharge aimed at a household with no second employer plan does not relocate anyone. It collects money from an employee who has no way to avoid it, which is a resentment generator with a zero in the savings column.
Before you renew the surcharge at the same dollar amount, ask the only question that matters: did the population paying it shrink last year? If the surcharge-paying headcount held steady or grew through 2026, it is no longer a behavioral tool. It is a quiet premium increase on married employees, and employees generally figure that out.
ICHRA looks better for the wrong reason
Individual coverage HRAs are getting a fresh look, and Remodel Health's September 2026 analysis argues ICHRA is emerging as a stabilizing force in the individual market as subsidies sunset. There is a real case for ICHRA in certain workforces: geographically dispersed teams, high-variance group renewals, employers who want defined-contribution predictability.
But notice the trap. ICHRA looks more attractive on a spreadsheet right now partly because the comparison point got worse, not because ICHRA got better. An employee moved from group coverage to an ICHRA is shopping the same repriced individual market your waivers just fled. If the allocation does not track actual 2026 and 2027 individual premiums in each employee's rating area, you have converted a group plan problem into an affordability problem with your name on it. Adopt ICHRA because the design fits your workforce, not because the alternative deteriorated.
The one-page repricing memo to write before enrollment closes
This does not require a consulting engagement. It requires three numbers and a decision. First, actual 2026 waiver rate versus the rate assumed in your 2026 and 2027 budget. Second, total dollars paid in opt-out credits and total dollars collected in spousal surcharges, with headcount for each. Third, year-over-year movement in surcharge-paying headcount, which tells you whether the surcharge still changes behavior or has become a flat tax.
If waiver rates fell and credit spend held flat, you are paying for a result you already had. Options range from narrowing eligibility, for example requiring proof of other group coverage rather than any coverage, to tiering the credit down, to retiring it and redirecting the dollars into premium relief for the larger covered population. The last option communicates better than it scores, and communication is doing more work this cycle than usual.
Employees are comparing your plan to visible public benchmarks. The 2027 FEHB premium increase was announced and covered in early October 2026 by Federal News Network, landing squarely inside most private-sector enrollment windows. EPIC Brokers' October 2026 Compliance Matters and ADP's October 2026 employer compliance calendar are tracking the same crowded deadline stretch. If your employees hear the cost math from a news alert before they hear it from you, the design change you made for sound reasons will read as a takeaway.
