Start with one number. Take the monthly employee-only premium for your employer's cheapest qualifying plan, multiply by 12, and divide by your household income. If it's above 9.96% (the 2026 threshold), the plan counts as unaffordable for you, and you may qualify for a Marketplace tax credit.
The ACA affordability test
If your employer offers coverage that's both "affordable" and meets "minimum value," you can't get a Marketplace premium tax credit. Here's how affordability works:
- For you, the employee: the test uses the cost of employee-only coverage on the cheapest plan that meets minimum value, not the plan you picked.
- For your spouse and kids: since 2023, the test uses the cost of family coverage. This fixed the old "family glitch."
Example
Household income: $70,000. Employee-only premium: $150/month ($1,800/year, or 2.6% of income), which is affordable for the employee. Family premium: $900/month ($10,800/year, or 15.4% of income), which is unaffordable for the family. The employee stays on the job plan, and the spouse and kids may qualify for a subsidized Marketplace plan.
Six ways to pay less
1. Move the family to the Marketplace
If family coverage fails the affordability test, your spouse and children may get a tax credit on a Marketplace plan while you keep the employer plan.
2. Compare your spouse's employer plan
Two job offers in a household? Price out every combination: everyone on one plan, everyone on the other, or split.
3. Choose a different plan tier
Many employers offer an HSA-eligible plan with a lower premium. If you're healthy, the savings plus the HSA tax break can outweigh the higher deductible.
4. Look at private coverage
For healthy people who don't qualify for a subsidy, a private underwritten plan can sometimes beat a pricey employer plan. These plans ask health questions and may exclude pre-existing conditions, so they aren't right for everyone.
5. Ask your employer about an ICHRA
Some employers are switching to an Individual Coverage HRA, giving each employee a tax-free allowance to buy their own plan. If you're in HR or own the business, it's worth a look.
6. Don't forget the out-of-pocket side
Sometimes the problem isn't the premium. A low-premium plan with a $7,000 deductible can be the expensive choice for a family with regular prescriptions.
Timing: when can you switch?
Premiums paid through payroll are usually locked in for the plan year under your employer's Section 125 plan. Usually you can change at:
- Your employer's open enrollment (often in the fall).
- Marketplace Open Enrollment, which starts November 1.
- A qualifying life event like marriage, a new baby or a move.
Line the dates up so your new coverage starts the day the old one ends.
Frequently asked questions
What makes employer insurance unaffordable under the ACA?
For 2026, an employee-only premium on the cheapest qualifying plan above 9.96% of household income. For family members, the family premium is tested.
Can I decline my employer's plan and buy a Marketplace plan?
Yes, but you only get a tax credit if the offer is unaffordable or doesn't meet minimum value, and you aren't enrolled in it.
What is the family glitch?
The old rule that tested family affordability on employee-only cost. Since 2023, families are tested on the family premium.
Paying too much at work?
Send us your employer's rate sheet. We'll run the affordability test and compare every option, at no cost to you.
Get a QuoteGeneral information only, not tax or legal advice. Affordability thresholds are set annually by the IRS. Confirm current figures and your eligibility before making changes.