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Free tool · the 9.96% test + the family glitch fixIs My Employer Health Insurance "Affordable"? The 2026 Test That Decides Whether You Can Get a Subsidy
By Dick Tracy · Published August 29, 2026
Can you get a marketplace subsidy if your employer offers health insurance? Only if the job plan fails the IRS affordability test. For 2026, employer coverage is "affordable" when your share of the cheapest employee-only plan is 9.96% of household income or less. Pass that test and you get no premium tax credit, even if you said no to the plan. Fail it and the marketplace door opens. Your spouse and kids get their own test on what it costs to add them, which is the "family glitch fix." This free calculator runs both tests in 30 seconds. No email, no signup. I educate, you decide.
Estimates only, using the IRS 2026 affordability percentage of 9.96% (Rev. Proc. 2025-25). Affordability is measured on household income for the whole tax family and on the lowest-cost plan that provides minimum value (pays at least 60% of covered costs). A plan that fails minimum value is treated as unaffordable no matter the price. This is education, not tax or enrollment advice. Bring me the numbers and we'll run it together.
How the affordability test works, in plain English
The IRS asks one question: does the cheapest employee-only plan your employer offers, one that pays at least 60% of covered costs, cost you more than 9.96% of your household income for 2026? If no, the plan is affordable and you cannot get a premium tax credit, whether or not you enrolled. If yes, you can turn it down and shop the marketplace with a subsidy. Three details trip people up. "Household income" is the whole tax family's modified adjusted gross income, not just the employee's paycheck. "Cheapest plan" means the lowest-cost option offered, even if you'd never pick it. And "your share" is what comes out of your check, not the total premium on the benefits sheet.
The family glitch, and why it matters more in 2026
Until 2023, the whole family was tested on the employee-only premium. Since a solo premium is usually cheap, spouses and kids were locked out of subsidies even when adding them cost $1,000 a month. Treasury fixed that. Now the employee is tested on the self-only price and the family is tested separately on the price of adding them. When family coverage fails the test, the spouse and children can enroll on the marketplace with a subsidy while the employee stays on the job plan. With Western New York family premiums where they are, this split is often the cheapest legal setup a household can have, and almost nobody at the employer will tell you it exists.
| Household income | 9.96% line, per year | Per month |
|---|---|---|
| $40,000 | $3,984 | $332 |
| $60,000 | $5,976 | $498 |
| $80,000 | $7,968 | $664 |
| $100,000 | $9,960 | $830 |
| $120,000 | $11,952 | $996 |
Read it like this: at $60,000 of household income, an employee-only plan costing you $498 a month or less is affordable (no subsidy for you), and a family tier costing more than $498 a month is unaffordable (subsidy possible for the family).
What to do with your result
If the job plan is affordable for everyone, the marketplace has no price advantage for you, and the question becomes whether the job plan is actually good or just cheap. That is a network and deductible conversation, and there are doors outside both: in New York, healthy families can merge into pre-established ERISA group plans; in most other states, private plans priced on you. If the plan is unaffordable, go check the income side on my subsidy cliff calculator before you count on anything, and read the 12 knockouts so nothing else surprises you at tax time. Either way, keep the benefits summary you used. If the marketplace grants a credit based on accurate employer-coverage answers, the IRS honors it even if the numbers were close.
Common questions about employer coverage and the subsidy
Can I get a subsidy if my employer offers health insurance?
Only if the employer coverage fails the IRS affordability or minimum value test. For 2026, employer coverage is affordable if your share of the premium for the cheapest self-only plan is 9.96% of household income or less. If it passes, no marketplace premium tax credit for you, even if you turned the job plan down. If your share is more than 9.96%, or the plan pays less than 60% of covered costs, you can decline it and get a subsidy based on your income. If you actually enroll in the employer plan, you are ineligible for those months regardless.
What is considered affordable employer health insurance in 2026?
Employer coverage is affordable in 2026 when the employee's required contribution for the lowest-cost self-only plan that provides minimum value is no more than 9.96% of household income (up from 9.02% in 2025). On $60,000 of household income that is $5,976 a year or $498 a month. At or under that number, the coverage is affordable for the employee. For the spouse and children, the test runs separately against the cost of family coverage.
What is the family glitch and is it fixed?
The family glitch tested a whole family's affordability using only the employee-only premium, which locked spouses and children out of subsidies even when adding them cost thousands a month. Treasury fixed it starting with 2023 coverage. Now the employee is tested on the self-only premium and family members are tested separately on what it costs to add them. If family coverage costs more than 9.96% of household income in 2026, the spouse and children can qualify for a subsidy even though the employee cannot.
Can my spouse get a marketplace subsidy if my employer offers family coverage?
Yes, if the family coverage is unaffordable. Your spouse and kids are tested on the cost of adding them to your job plan, not on your employee-only premium. If your share for family coverage is more than 9.96% of household income, they can enroll on the marketplace with a premium tax credit while you stay on the job plan. Household income is the same modified adjusted gross income for the whole tax family, and you still have to file jointly.
Will I be penalized for getting a subsidy if my employer offers a health plan?
If the employer plan was affordable and minimum value and you took the subsidy anyway, the IRS treats the advance credit as an overpayment on Form 8962 and you repay it, and for 2026 there is no cap. One protection: if you gave the marketplace accurate information about the employer offer and it still granted the credit, the IRS does not claw it back on the employer-coverage ground. Answer honestly and keep the numbers you used.
Does cash my employer pays me for waiving coverage count?
If the opt-out payment is unconditional, meaning you get it just for declining, the IRS adds it to your required contribution. A $100 a month premium plus $250 a month opt-out cash is treated as $350 a month. If the payment is conditional, for example you must prove other coverage to receive it, it is not added. This can flip an affordable plan to unaffordable, which opens the subsidy door. The calculator above handles it.
Send me the summary from HR and your income estimate. I'll tell you which door is open, what it costs, and whether the job plan is actually good or just cheap. Free, no hard sell. I educate, you decide.
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