Affordable coverage

A job-based health plan covering only the employee that costs 9.66% or less of the employee’s household income. If a job-based plan is “affordable,” and meets the “minimum value” standard, you're not eligible for a premium tax credit if you buy a Marketplace insurance plan instead.

  • The plan used to define affordability is the lowest priced “self-only” plan the employer offers — meaning a plan covering only the employee, not dependents. This is true even if you’re enrolled in a plan that costs more or covers dependents.
  • The cost is the amount the employee would pay for the insurance, not the plan’s total premium.
  • The employee’s total household income is used. Total household income includes income from everybody in the household who’s required to file a tax return.

Example 1

  • Employee’s monthly household income = $4,083 (about $49,000 per year)
  • 9.66% of the employee’s monthly household income = $394
  • 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 9.66% of the employee’s household income ($394).

Example 2

  • Employee’s monthly household income = $2,333 (about $28,000 per year)
  • 9.66% of the employee’s monthly household income = $225
  • Monthly cost to the employee of the lowest-priced plan the employer offers for self-only coverage = $275
  • Is the plan affordable? NO. The employee’s share of the lowest-cost self-only plan ($275) is more than 9.66% of the employee’s household income ($225).

To find out if your employer’s plan meets the affordability standard, ask your employer. You can also ask them to fill out the Employer Coverage Tool (PDF).

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