Pre-Tax vs Post- Tax: What's the employee experience?

Pre-tax experience:

• Employee skips the marketplace subsidy (PTC).
• Their share of premium (above the ICHRA amount) is deducted from before-tax paycheck dollars — like a 401(k) deduction.
• Smaller tax bill, smaller net paycheck hit.

Post-tax experience:

• Employee takes a marketplace subsidy (PTC), or the employer doesn't offer pre-tax payroll deduction.
• Their share of premium comes out of after-tax take-home pay, like a regular bill.
• No special payroll setup needed — happens automatically.

The one rule that decides which one an employee is in: Are they using a Premium Tax Credit? If yes → post-tax, by law. If no, and the employer offers it → pre-tax is an option.

Everything else (the ICHRA reimbursement itself) is tax-free either way — that part never

Potential pre-tax employee side payment:

If the employee's medical expenses (including their portion of the premium) exceed 7.5% of the Adjusted Gross Income (AGI) they can be included in an itemized tax deduction. If employees have questions here, and believe they might qualify for the itemized deductions, they should seek the opinion of a licensed tax advisor.