Affordable Coverage

Employer coverage is considered affordable, as it relates to eligibility for the Advanced Premium Tax Credit, if the employee only cost of the plan is less than 9.86% of the household income (updated for 2019).

Hourly employees can use this formula: Hourly rate x 130 = Monthly salary.  W2 calculations.

The 9.86% affordability factor only applies to employee-only premiums. Also, it doesn’t matter if the spouse and/or children are currently enrolled in the coverage or not. Even if the employer doesn’t pay anything to cover the spouse and/or children your family will not be eligible for the Advanced Premium Tax Credit if the employee-only premiums are affordable.

In other words, if your share of your premiums for a plan that covers only you (the employee)–not your family–is less than 9.86% of your family’s income, the plan is considered affordable. You may pay more than 9.86% of your income on premiums for spouse or family coverage from your employer. But affordability is determined only by the amount you’d pay for self-only coverage from your employer.

However, 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.