If a job offers you health insurance, the marketplace asks one question before anything else: is that offer “affordable”? The answer decides whether you can get a premium tax credit on a marketplace plan. It is a fixed test with a published number, not a judgment about your budget, and it is easy to run yourself.
The test
Take the cheapest plan your employer offers that meets the minimum value standard (more on that below). Look at what you would pay for self-only coverage on it for the year. Divide by your household income. If the result is no more than the IRS percentage for that plan year, the offer counts as affordable.
| Employer plan year | Affordable if at or below | IRS source |
|---|---|---|
| Plan years starting in 2027 | 10.22% | Rev. Proc. 2026-26 |
| Plan years starting in 2026 | 9.96% | Rev. Proc. 2025-25 |
The percentage follows your employer's plan year, not the calendar. A plan year that starts July 1, 2026 is measured against 9.96% even for the months that fall in 2027.
- Household income is the IRS version: modified adjusted gross income for you and everyone in your tax household who has to file a return. It is not just your salary.
- Only the self-only price counts for your test, even if you would actually buy family coverage.
- If the employer runs a wellness program, use the premium you would pay with the full tobacco-cessation discount and no other wellness discounts.
Minimum value: the other half
A plan meets the minimum value standard if it is designed to pay at least 60% of the total cost of covered services for a standard population, and covers hospital stays and doctor visits in a substantial way. Most job-based plans do. Your plan's Summary of Benefits and Coverage says whether it meets the standard. An offer that fails minimum value does not stop you from getting a credit, whatever it costs.
What “offered” means
The rule turns on whether you could enroll, not whether you did. That cuts both ways:
- Declining does not help.If the offer is affordable and meets minimum value, you can't get a credit for any month you have it, even if you turn it down. The same is true of an affordable offer through your spouse's job.
- Enrolling ends it.If you enroll in a job-based plan, you can't get a credit for yourself on marketplace coverage, even if the job plan was unaffordable.
- A former employer is different. Being able to take COBRA or retiree coverage does not count against you; you can turn it down and may still qualify. See COBRA vs. a marketplace plan.
- If a new job makes you wait before you can enroll, you can buy a marketplace plan, with savings if you qualify, until the job coverage starts.
The family rule
Through 2022, your family members were judged by the price of yourself-only coverage. A cheap self-only offer made the whole family ineligible for help, however much family coverage cost. This was called the “family glitch.”
A Treasury and IRS rule published October 13, 2022 changed that, starting with the 2023 tax year. Your spouse and dependents are now measured against what you would pay for family coverage: the cheapest option that covers you and every family member offered coverage, and that meets minimum value for them. The same percentage applies.
The employee is still judged on self-only coverage: The family rule helps your spouse and children, not you. If your self-only price passes the test, you can't get a credit, even when family coverage is unaffordable and the rest of the family can. One catch: if your plan only lets family members join when you enroll too, and family coverage is affordable, they can't get a credit by your declining it.
Worked examples
These use 2027 plan years (10.22%) and made-up premiums. The premium tax credit has its own income limits on top of this: for 2027, household income must be between 100% and 400% of the poverty level (see how ACA subsidies work).
- Single, $40,000 household income. The cheapest minimum-value plan costs her $400 a month for self-only coverage: $4,800 a year, or 12.0% of income. That is above 10.22%, so the offer is unaffordable and she may qualify for a credit on a marketplace plan. Had it cost $340 a month ($4,080, or 10.2%), it would be affordable and she would not.
- Family of four, $60,000 household income. Self-only coverage costs the employee $150 a month: $1,800 a year, or 3.0%. Affordable, so the employee can't get a credit. Family coverage would cost $700 a month: $8,400, or 14.0%. That fails the test, so the spouse and children may qualify for a credit on a marketplace plan while the employee stays on the job plan. (Children in a household like this may qualify for Medicaid or CHIP instead; the marketplace application checks.)
The 10.22% line is about $5,110 a year at $50,000 of income, or about $426 a month. Multiply your own income by 0.1022 to find yours.
How to check yours
- Find what you would pay per paycheck for the cheapest plan, self-only and for the family members who could join. Your benefits portal or enrollment packet usually lists it.
- Ask your employer to fill out HealthCare.gov's Employer Coverage Tool. It asks exactly what the marketplace needs: whether the plan meets minimum value, and the employee's cost for self-only and for family coverage.
- Put those answers into a marketplace application. It runs the test for you and for each person in your household, and tells you who qualifies. Applying commits you to nothing; you can still take the job plan.
Get the income right: The test uses the household income you estimate for the year. There is a safe harbor, but only for one case: when you enrolled, you gave the marketplace accurate information about the plan's cost, and the marketplace determined that advance payments of the credit could be made because the offer was unaffordable based on your projected income. Then the IRS treats the offer as unaffordable even if your actual income turns out higher. Your credit itself is still reconciled against your actual income at tax time.
Comparing the job plan with marketplace plans on cost? Upload your employer's benefits guide or SBC to the plan document analyzer, and browse marketplace plans for your state.
Sources: IRS Rev. Proc. 2026-26 (2027 percentage); IRS Rev. Proc. 2025-25 (2026 percentage); IRS: premium tax credit questions and answers; Federal Register: Affordability of Employer Coverage for Family Members of Employees (87 FR 61979); HealthCare.gov: job-based or marketplace coverage; HealthCare.gov: Employer Coverage Tool (PDF).