Affordable Care Act

Employer Coverage Affordability

In 2023, a job-based health plan is considered “affordable” if your share of the monthly premium in the lowest-cost plan offered by the employer is less than 9.12% of your household income. The lowest-cost plan must also meet the minimum value standard. If you’re the employee, affordability is based on only the premium you’d pay for self-only (individual) coverage. For coverage starting January 1, 2023, if you’re offered job-based coverage through a household member’s job, affordability is based on the premium amount to cover everyone in the household. Total household income includes incomes from everybody in the household who’s required to file a tax return. If the premiums aren’t considered affordable for the employee and the household, they may qualify for savings in a Marketplace plan. But, if the premium is considered affordable for the employee, but not for other members of the household, then only the other household members may qualify for savings.

Example:

• Household’s monthly income = $4,083 (about $49,000 per year).
• 9.12% of the household’s monthly household income = $372

For the employee:

• Monthly premium the employee would have to pay for the lowest-priced plan that covers just the employee = $300
• Is the plan affordable for the employee? YES. The premium the employee would have to pay to cover just themselves ($300) is less than 9.12% of the household’s income ($372). Because the job-based coverage is affordable for the employee, the employee won’t qualify for savings in the Marketplace.

For other household members:

• Monthly premium the employee would have to pay for the lowest-priced plan that covers other members of their household = $450
• Is the plan affordable for other household members? NO. The premium the employee would have to pay to cover others in the household ($450) is more than 9.12% of the household’s income ($372). Because the job-based coverage isn’t affordable for the employee’s household members, the employee’s household members may qualify for savings in the Marketplace.