Affordable Care Act Premium Tax Credits and are NOT available to people eligible for Health First Colorado (Medicaid) or Medicare or who have affordable coverage through an employer.
In 2023, affordable coverage is defined as coverage for employee and family members costing no more than 9.12% of household income.
Additionally, there will be a separate affordability determination for the employee (based on self-only coverage), and for family members (based on the total cost of family coverage).
So, depending on how an employer subsidizes the cost of family coverage, it’s possible that coverage could be considered affordable for the employee, but not for family members. In that case, the family members would potentially be eligible for a premium tax credit in the marketplace, but the employee would not.
However, the cost to cover non-dependent family members will not be taken into consideration. So for example, young adults can remain on a parent’s health plan until they turn 26, but are generally not considered a tax dependent for the last few years of that window. Tax dependents generally must be younger than 19 years old or be a “student” younger than 24 years old as of the end of the calendar year. There is no age limit if child is “permanently and totally disabled.”
Finally, if the employer plan does not cover “minimum value” then the employee could be eligible for the Advanced Premium Tax Credit. A health plan meets the Minimum Value standard if it’s designed to pay at least 60% of the total cost of medical services for a standard population. Most comprehensive health insurance plans will meet this standard.
In 2022, employer coverage was considered affordable, as it related to eligibility for the Advanced Premium Tax Credit, if the employee only cost of the lowest cost plan was less than 9.61% of the household income. The 9.61% affordability factor only applied to employee-only premiums. Also, it didn’t matter if the spouse and/or children were currently enrolled in the coverage or not. Even if the employer didn’t pay anything to cover the spouse and/or children your family was not eligible for the Advanced Premium Tax Credit if the employee-only premiums were affordable.
- Employee’s monthly household income = $4,083
- 9.83% of the employee’s monthly household income = $401
- 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 9.83% of the employee’s household income ($401).
- Employee’s monthly household income = $2,333
- 9.83% of the employee’s monthly household income = $229
- 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 9.83% of the employee’s household income ($229).