Lamont Proposes Health Insurance Tax Credits for CT Small Businesses

Gov. Ned Lamont picked a Waterbury chocolate factory on Wednesday to announce a new push to help Connecticut’s smallest employers cover their workers’ health insurance costs.

The venue wasn’t random. Fascia’s Chocolates, a Waterbury manufacturer that turns out 100,000 pounds of chocolate every year, is exactly the kind of small business the proposal targets. Carmen Romeo, president of Fascia’s Chocolates, used to offer his employees a group health plan. Premiums kept rising, workers couldn’t keep up with their share, enrollment dropped too low to sustain the plan, and the insurer eventually walked. Today, Romeo’s employees find their own coverage or go without.

“We’re committed to our employees. Anything we can do to help them, we’re going to. And these ICHRAs are a good way to help,” Romeo said.

ICHRA stands for Individual Coverage Health Reimbursement Arrangement. The mechanics are straightforward: a small business reimburses workers who buy their own health plans on the individual market, and the employer then claims a state tax credit worth up to $1,000 per employee annually. Only businesses with fewer than 50 workers qualify. It won’t replace traditional group coverage, but for companies like Fascia’s it offers a real alternative to doing nothing.

“We’re trying to make sure small businesses also can provide health insurance and little ways that we can make a difference,” Lamont said.

Why Small Businesses Are Hurting

Romeo’s situation isn’t unusual. Across Connecticut, small employers have watched group plan costs climb to a point where offering coverage stopped making financial sense. The Kaiser Family Foundation has documented for years how small businesses trail large employers in benefits offerings, creating a structural disadvantage when it comes to hiring and retaining workers.

Chris DiPentima, president and CEO of the Connecticut Business and Industry Association, the state’s largest trade group, said the credit would hit hardest where relief is most needed: businesses with 10 or fewer employees. He put the potential universe of eligible Connecticut companies in the “tens of thousands.” That’s not a rounding error. It’s a significant slice of the state’s employer base, and most of these companies aren’t offering health benefits right now because the numbers don’t work.

The ICHRA concept also sidesteps one of the thorniest problems in small business health coverage: “multiple employer welfare arrangements,” which have faced legal and regulatory turbulence for years and haven’t delivered the savings advocates promised. ICHRAs don’t carry that baggage.

Legislative Path

The bill, House Bill 5378, cleared the Human Services Committee in March. The committee’s co-chair, Democrat Matt Lesser of Middletown, has spent years pushing back on what he sees as the Lamont administration’s underinvestment in health policy. He backed this one anyway, calling the credits a smart idea that could cut costs for small businesses quickly.

The bill’s next stop is the Finance Committee before a full House vote. Lamont told reporters Wednesday he’s getting positive signals from lawmakers across party lines. For a proposal that costs the state up to $5 million per year starting in 2027, plus a one-time administrative outlay of $30,000 to stand the program up, that bipartisan warmth isn’t surprising. It’s not a massive fiscal commitment, and the political optics of helping small businesses afford health insurance are hard to oppose in an election year.

The CT Mirror first reported on Lamont’s broader 2026 health insurance agenda, which frames the ICHRA proposal as one piece of a larger effort to address coverage gaps the state’s employer-sponsored system has never fully closed.

Small businesses in Connecticut have long struggled to compete with corporate employers on benefits. That gap feeds turnover, depresses wages workers might otherwise trade for coverage, and pushes more people into the individual market or onto state programs. A $1,000-per-employee credit won’t close that gap entirely. But for a shop with 15 workers where nobody currently has employer-assisted coverage, it’s a concrete starting point.

Romeo put it plainly: “We’re committed to our employees.”