Your employer’s health plan costs $310 a month for you alone: the 2026 affordability test that decides if the marketplace is cheaper

7 min read · Last updated July 6, 2026

Priya’s employer offers a health plan that costs her $310 a month for employee-only coverage, about $3,720 a year. Her household income is $46,000. Adding her husband and daughter to the job plan would run $1,150 a month. She wants to know a single thing: should the family stay on the employer plan, or can the ACA marketplace beat it? The answer is not a guess. It is a percentage and four numbers.

The rule that governs this changed in 2023, and most people still do not know it. Run the test wrong and you either overpay on a job plan or wrongly assume the marketplace is off-limits. Here is the 2026 math, in the order to run it.

In this article

– The number that decides everything: 9.96% of income – Run the self-only test first (four numbers) – The family test that changed in 2023 – Employer plan vs marketplace: the side-by-side – When the marketplace wins, and the dates you cannot miss – FAQ

The number that decides everything: 9.96% of income

For plan years beginning in 2026, the IRS set the ACA affordability threshold at 9.96% of household income, up from 9.02% in 2025. In plain terms: if the cost of your employer’s lowest-priced self-only plan is 9.96% of your household income or less, the government calls that coverage “affordable,” and you are locked out of premium subsidies on the marketplace for yourself. If it costs more than 9.96%, the coverage is “unaffordable,” and you become eligible for those subsidies.

Household income here means your Modified Adjusted Gross Income, which for most people is close to the total income on their tax return. The 9.96% is the highest this threshold has ever been, which means slightly more employer plans will count as affordable in 2026 than in prior years. That one number is the gate. Everything else is measuring against it.

Run the self-only test first (four numbers)

Test your own coverage before you think about the family. Four numbers:

1. Household income (MAGI). Priya’s is $46,000. 2. Your annual share of the lowest-cost self-only employer premium. Hers is $3,720 ($310 times 12). 3. 9.96% of your income. For Priya, $46,000 times 0.0996 is $4,581.60. 4. The gap. Compare number 2 to number 3.

Priya’s self-only cost of $3,720 is below the $4,581.60 line, so her own coverage is affordable. She cannot get a marketplace subsidy for herself, and for one person, the $310 job plan is almost certainly her cheapest real option. If her self-only share had been, say, $400 a month ($4,800 a year), it would clear the line and she would qualify for subsidized marketplace coverage. Run this test with your own two numbers before going further, the way our four-number filter for choosing between two employer plans walks a household through a related decision.

The family test that changed in 2023

Here is the part that catches families. Until 2023, affordability was judged only on the employee’s self-only cost. If that was affordable, the whole family was blocked from subsidies, even when adding the family cost a fortune. That trap was called the “family glitch.” A 2023 rule fixed it.

Now you run a second test for the family. Take the cost to cover the whole family on the employer plan and compare it to the same 9.96% of household income. Priya’s family coverage is $1,150 a month, or $13,800 a year. Against 9.96% of $46,000 ($4,581.60), the family cost is far higher. That means the family coverage is unaffordable, and her husband and daughter qualify for premium tax credits on the marketplace, even though Priya’s own coverage does not. The likely winning move for Priya’s household: she stays on her affordable $310 job plan, and her husband and daughter shop subsidized marketplace plans. This split is exactly what the family-glitch fix was designed to allow.

Employer plan vs marketplace: the side-by-side

Once you know who qualifies for a subsidy, compare the real out-of-pocket cost on each side, not the sticker premium.

Factor	Employer plan	ACA marketplace
Premium	Fixed by employer; often subsidized for the employee only	Subsidized only if your employer offer fails the 9.96% test
Adding family	Full family premium, rarely employer-subsidized	Family can get subsidies if family coverage is unaffordable
Plan choice	Usually 1 to 3 options	Many plans across metal tiers
Pre-tax premiums	Yes, paid pre-tax through payroll	No, paid with after-tax dollars
Best for	The employee whose self-only coverage is affordable	Family members priced out of the job plan

One caution the table cannot capture: employer premiums come out of your paycheck pre-tax, which quietly lowers their true cost, while marketplace premiums are paid with after-tax dollars. Weigh that when the two are close. If the employee’s job plan is affordable, splitting the family, employee on the job plan, dependents on the marketplace, often wins, but check whether two separate deductibles cost more than one family deductible for how your household actually uses care.

When the marketplace wins, and the dates you cannot miss

If your employer offer fails the 9.96% test, or you have no offer at all, the marketplace is likely your cheaper path, and two dates matter. Open enrollment for 2026 coverage runs in a fixed window that typically opens November 1 and closes in mid-January; outside it you generally cannot enroll. The exception is a qualifying life event, which opens a 60-day special enrollment period. Losing job-based coverage is one such event, the same 60-day clock our guide on COBRA versus the ACA marketplace after a layoff breaks down.

If your own coverage is affordable but the premium still stings, there are levers before you give up the plan, from tier changes to HSA-eligible options, covered in our guide on lowering your monthly health insurance premium. Run the affordability test first, then decide, because the test determines whether a subsidy is even on the table.

FAQ

What counts as “household income” for the affordability test? It is your Modified Adjusted Gross Income, or MAGI, which for most households is close to the adjusted gross income on your federal tax return plus a few add-backs like tax-exempt interest. Use your expected income for the coverage year, not last year’s, if you know it will differ.

My self-only coverage is affordable but family coverage is expensive. What do I do? Since the 2023 family-glitch fix, you can keep your affordable self-only job plan while your spouse and children apply for subsidized marketplace coverage. Test the family cost against 9.96% of household income; if it is higher, your dependents likely qualify for premium tax credits.

Does taking the marketplace subsidy affect my taxes? Premium tax credits are reconciled on your federal return. If your actual income ends up higher than you estimated, you may repay part of the credit; if lower, you may get more. Report income changes to the marketplace during the year to keep the credit accurate and avoid a surprise at tax time.

Can I drop my employer plan mid-year to switch to the marketplace? Usually not without a qualifying life event. Voluntarily dropping job coverage does not by itself open a special enrollment period. Plan the switch during open enrollment, or wait for a qualifying event such as loss of coverage, marriage, or the birth of a child.

Where do I find my “lowest-cost self-only” premium? Ask your HR or benefits team for the employee-only monthly premium of the cheapest plan that meets minimum value. That figure, not the cost of the plan you actually chose, is the number the affordability test uses.