Health insurance can be purchased through the Marketplace as long as your employer does not offer you affordable coverage.
The premium tax credit is only available to people without affordable and adequate coverage; in many cases, this will mean that people with employer-sponsored coverage will not be eligible for the premium tax credit.
Affordable health insurance
If my employer offers health insurance can I still qualify for a premium tax credit?
In most cases, no. If your employer offers coverage this usually makes you ineligible for premium tax credit.
♦ The exception is if your employer-sponsored coverage is unaffordable or fails to meet the minimum value standard.
Is my employer's plan affordable?
This question comes into play if you hope to receive tax credits to purchase insurance through the Marketplace instead of receiving your employer's health insurance.
In 2024, insurance from your employer is considered affordable if the employee’s share of the premium for the lowest self-only plan available does not exceed 8.39% of an employee's household income.
♦ The law used to consider only the cost for insurance that would cover the employee only — not the employee’s family. This oddity in the law was called the “family glitch”.
♦ At the end of 2022, the Biden administration finalized a rule change to fix the "family glitch."
The rule change took effect in time for enrollment in plans starting January 1, 2023.
• The IRS decided that an employer would not be able to understand an employee's household income so they set a dollar limit as a form of "safe harbor" for the employer to use.
If an employer that offers a medical plan option in 2024 that does NOT cost the employee more than $101.93 per month for employee-only coverage then that coverage will automatically meet the ACA affordable standard.
♦ Should the employee enroll in a Marketplace plan instead, he or she would NOT qualify for a premium tax credit. Because their employer provides affordable coverage.
Family is more complicated.
You may purchase a family plan through your employer but if family coverage costs more than 8.39% of household income than an employer's family plan would not be affordable.
Keep in mind that with most job-based health insurance plans, your employer pays part of your monthly premium. It is only what you actually pay that counts toward the 8.39%.
It is most likely that you will not exceed 8.39% for employ-only coverage but the cost of family coverage may exceed 8.39%.
♦ With the rule change it is possible your family members may be able to received savings at the Marketplace, if family coverage is not affordable.
Employee’s monthly household income = $4,000
8.39% of the employee’s monthly household income = $335.60
→ Monthly cost to the employee of the lowest-priced plan the employer offers for self-only coverage = $300
Is the plan affordable? YES. The employee’s share of the lowest cost self-only plan ($300) is less than 8.39% of the employee’s household income ($335.60).
→ Monthly premium the employee would have to pay for the lowest-priced plan that covers other members of his or her household = $450
Is the plan affordable? NO The premium the employee would have to pay to cover others in the household ($450) is more than 8.39% of the household’s income ($335.60).
Because the job-based coverage is not affordable for the employee’s household members, the employee’s household members may qualify for savings in the Marketplace.
I believe my employer's plan not affordable...
What do I do?
If you believe your employer's health insurance is not affordable or does not meet the minimum value standard you should report this to the Marketplace.
The Marketplace has available a form called: Employer Coverage Tool. It is a two page document which asks information from you and from your employer.
♦ Employers are not required to complete this form but most will.
The form will help you to show the Marketplace the type and cost of health insurance available through your employer.
If you cannot obtain this information from your employer, you should still report to the Marketplace what you know. The cost of coverage and whether it meets the minimum value standard.
♦ The Marketplace may try to follow up with your employer to verify this information.
The Marketplace will determine your eligibility for subsidies based on the information you provide and based on any information the Marketplace might be able to obtain from your employer.
♦ All employers are required to provide you with this information at year end. In January, your employer will provide you with a Form 1095-C.
This form will indicate whether your employer's health insurance plan (in the prior calendar year) met the requirements for affordability and minimum value.
There could be a conflict if your employer uses the "safe harbor" dollar value to defend their coverage as being affordable. It is not clear how such a conflict will be resolved.
Can my family buy from the Marketplace?
And I have my company's insurance.
Yes. Your spouse and children can purchase insurance thorough the Marketplace.
Minimum Value Standard
A health plan meets the minimum value standard and is adequate if it pays at least 60% of the total cost of medical services for a standard population and offers substantial coverage of hospital and doctor services.
In other words, in most cases a plan that meets minimum value will cover 60% of covered medical costs. You would pay 40%.
Most job-based plans meet the minimum value standard.
Dig a little deeper into this subject at Minimum Essential Coverage.
If the coverage is affordable and adequate, you will be ineligible for premium tax credits regardless of whether you decide to enroll in the employer-sponsored coverage.
If your employer’s health plan does not offer adequate coverage or is not affordable, you can enroll in coverage through the Marketplace and you may qualify for premium tax credits.