Your employer offers a plan you cannot afford
There is a specific legal test for this, and for 2027 the number is 10.22% of household income. Which side of it you fall on decides whether the marketplace can help.
Being offered coverage at work normally blocks a premium tax credit. But not always — the rule has an exception, and it turns on a specific percentage.
The test
Employer coverage is affordable for 2027 if the premium you would pay is no more than 10.22% of household income. Above that, it fails the test, and you may claim a premium tax credit on a marketplace plan instead.
Required contribution percentage for plan years beginning in 2027: 10.22%. Source: IRS Revenue Procedure 2026-26.
Worked through
Household income of $50,000. 10.22% of that is $5,110 a year, or about $426 a month. If your share of the employer premium is more than that, the coverage is unaffordable and the marketplace is open to you with a credit.
What changed for families
This used to be much worse, and the fix is recent enough that plenty of people have not heard about it.
The affordability test used to be applied only to the cost of covering the employee alone. So if employee-only coverage was cheap but adding a family cost far more, the family was judged to have affordable coverage and was locked out of marketplace credits. This was known as the family glitch, and it affected millions.
It was fixed. Since 2023, family members are tested against the cost of the family premium, not the employee-only premium. If covering your family through work would cost more than 10.22% of household income, your family members can get marketplace credits — even where your own employee-only coverage is affordable and you stay on the work plan.
That split arrangement is legitimate and sometimes the cheapest outcome available: the employee on the employer plan, the rest of the household on a subsidized marketplace plan.
Getting the numbers right
Two figures are easy to get wrong, and both change the answer:
- The premium to use is the lowest-cost plan your employer offers that meets minimum value — not the plan you happen to be enrolled in. If your employer offers a cheaper option you did not take, that is the one tested.
- Household income means the income on your tax return, which includes a spouse's. Not your salary alone.
Ask your employer for a written statement of the lowest-cost employee-only premium and the lowest-cost family premium. They should be able to produce it.
If it passes the test anyway
Then no credit is available and the employer plan is almost certainly your best option, however unwelcome the price. You can still buy a marketplace plan at full cost — and if you do, how many insurers compete in your county becomes the main thing holding the price down.