Small business health insurance in Indiana

How Indiana's market is set up

Indiana uses the federal marketplace at HealthCare.gov. Five carriers offer individual marketplace plans for 2026 — Anthem, CareSource, Cigna, Coordinated Care, and UnitedHealthcare — and Celtic files off-marketplace individual plans as a sixth (Indiana Department of Insurance, 2026 Individual ACA Filings). Premiums follow the federal defaults — a 3:1 age curve and tobacco rating up to 1.5:1 — and Indiana uses a state-specific composite premium method in the small-group market (CMS, State Specific Rating Variations).

The Indiana Department of Insurance defines a small employer as 2–50 employees. The state has 92 counties, and premiums vary by rating area.

What an Indiana plan costs in 2026

The Indiana Department of Insurance approved an overall average increase of 27.2% for 2026 individual marketplace plans, against a final requested average of 32.3%. By carrier: Anthem 22.6%, CareSource 29.7%, Cigna 30.0%, Coordinated Care 30.0%, UnitedHealthcare 30.0% (IDOI, 2026 Rate Watch, final). For context, the national median proposed 2026 individual-market increase was 18% (Peterson-KFF Health System Tracker).

Small-group filings for 2026 ran from 5.7% (Anthem) to 11.4% (Physicians Health Plan of Northern Indiana), with Integon 6.1%, Southeastern Indiana Health Organization 8.3%, UnitedHealthcare 9.2%, and UnitedHealthcare of Kentucky 8.6% (IDOI, same document). IDOI did not publish a weighted small-group average, so we do not state one.

The gap between the two markets matters for an Indiana employer. The individual market's 27% rise raises the allowance needed to keep an ICHRA affordable for older staff; the small-group market's filed increases of 5.7% to 11.4% mean a well-run small group plan did not get dramatically worse this year. The tax credit below is what tips the comparison.

Your four real options as an Indiana employer

There are four ways to offer health insurance to employees in Indiana, and the state's market rules change how each one performs.

• A small-group plan (2–50 employees) through a carrier or the SHOP route. Predictable coverage, age-rated premiums, annual renewals, participation and contribution minimums.
• A PEO, which pools your staff into its own group plan and bundles payroll and HR for a fee on top of premiums. See our ICHRA vs PEO comparison.
• A taxable stipend. Simple, but it is wages: you owe employer payroll tax on it, the employee owes income tax, and it does not count as an offer of coverage. See our guide to health insurance stipends.
• An ICHRA — a fixed, tax-free monthly allowance employees use to buy their own individual plan on or off HealthCare.gov. No participation minimum, no renewal negotiation, and the allowance is a number you choose.

The Indiana HRA tax credit, in detail

House Enrolled Act 1004 (2023) added IC 6-3.1-38, effective for taxable years beginning after December 31, 2023 — the first state law of its kind. The Indiana Department of Revenue's Income Tax Information Bulletin #122 sets out how it works. An eligible employer has fewer than 50 employees and has adopted a health reimbursement arrangement in lieu of a traditional employer-provided health insurance plan. The credit is up to $400 per covered employee in the first year the HRA is established (2024 or later) and up to $200 per covered employee in the second year; nothing in the third year and after.

Three rules decide eligibility. First, the HRA contribution must be equal to or greater than either the level of benefits provided in the previous benefit year or the prior per-employee contribution — the credit rewards replacing coverage, not cutting it. A new employer that offered nothing because it did not exist the prior year gets the credit for its first two years. Second, the credit is nonrefundable, limited to state adjusted gross income tax liability, with unused credit carried forward up to ten years. Third, the statewide pool is $10 million per state fiscal year (July 1–June 30), first-come first-served by return receipt; once it is exhausted, claims filed in the rest of that fiscal year are not permitted and the credit otherwise allowable on that return is permanently disallowed (DOR Bulletin #122).

To claim it, use code 878 on Schedule IN-OCC, Part A, and complete Form HRA-1 when the Department requests it — failure to complete the form can mean denial of the whole credit (DOR Bulletin #122). Claimants also report to the Indiana Department of Insurance every three years on whether they kept the arrangement. Bulletin #122 refers to the arrangement by its Internal Revenue Code section (IRC §9831(d)), so confirm with your tax adviser which arrangement — ICHRA or QSEHRA — your plan documents establish and how it is reported. This is general information, not tax advice.

Worked example: a 12-person Indiana employer

Illustrative only. Suppose you replace a group plan with an ICHRA for 12 employees, contributing at least what you contributed before. Year one: up to 12 × $400 = $4,800 of Indiana income tax credit; year two: up to 12 × $200 = $2,400. Against ICHRA administration in the $14–85 per employee per month range (HRA Council, Growth Trends for ICHRA & QSEHRA, Vol. 4, 2024–2025; see our administration cost guide), the credit covers a meaningful share of the administrative cost of the switch in the first two years. It does not change the allowance economics, which are driven by the county premiums above — and because the credit is nonrefundable, an employer only realises it to the extent it has Indiana adjusted gross income tax liability in those years.

Setting an ICHRA allowance in Indiana

Indiana rates individual premiums on the federal 3:1 age curve, so a 64-year-old's premium can be up to three times a 21-year-old's for the same plan. Federal ICHRA rules let you vary the allowance by age up to that same 3:1 ratio, and in an age-rated state that is usually the fair design: a flat allowance treats a 25-year-old and a 60-year-old very differently in real purchasing power.

Location matters too. Indiana's premiums vary by CMS rating area, and the county spread shows it. In our 2026 calculator dataset (the figures shown on our ICHRA in Indiana page), the lowest-cost Silver plan for a 40-year-old in Indiana averages about $472/month, ranging from $440 to $509 across the state's 92 counties. That spread is why an allowance set from a statewide average fails the ACA affordability test in some counties and over-funds others.

Our ICHRA calculator uses those county-level 2026 lowest-cost Silver premiums by ZIP code, so you can see the affordability line for each employee before you set a number. For 2026, an offer is affordable when the employee's cost for the lowest-cost Silver plan, minus your allowance, is no more than 9.96% of the applicable income measure (IRS).

Group plan vs. ICHRA for an Indiana employer

Indiana's group market filed single-digit increases for 2026 while the individual market rose 27%, so the honest picture is that an ICHRA's advantage in Indiana is not a cheaper premium — it is control, no participation minimum, employee choice across five carriers, and a state credit that pays part of the switch. The table puts the two side by side.

How to set up an ICHRA in Indiana

The setup is the same federal process as anywhere: adopt a written plan document, define employee classes, set the allowance (by age band and rating area if you choose), deliver the required employee notice at least 90 days before the plan year begins, and reimburse against proof of individual coverage. Give employees a clear enrollment path — HealthCare.gov or an off-exchange carrier — and time the launch to a window when they can actually enroll: the annual open enrollment, or the special enrollment period that a new ICHRA offer triggers.

Who we are

The ICHRA Broker is licensed in New York and works with employers nationwide, including Indiana. We design, set up, and support ICHRAs for small and mid-sized employers — the county-by-county allowance work, the affordability testing, and the enrollment support employees need. Free quote, no obligation. This page is education, not tax, legal, or insurance advice.

Sources

• Indiana Department of Insurance, 2026 Individual ACA Filings — Rate Watch (final): 27.2% approved average; carrier detail; small-group filings.
• Indiana Department of Insurance, HIPAA overview: small employer 2–50.
• Indiana Department of Revenue, Income Tax Information Bulletin #122 (IC 6-3.1-38 HRA credit): amounts, eligibility, $10M cap, Schedule IN-OCC code 878, Form HRA-1.
• House Enrolled Act 1004 (2023), enrolled text: IC 6-3.1-38, effective for taxable years after December 31, 2023.
• House Enrolled Act 1004 (2023), IC 6-3.1-38: three-year reporting to the Indiana Department of Insurance.
• CMS, Market Rating Reforms — State Specific Rating Variations (Indiana: federal defaults; composite premium method).
• The ICHRA Broker calculator dataset: 2026 lowest-cost Silver premiums by ZIP.