Quick answer: Yes, you can buy a Marketplace plan even if your employer offers coverage, but you only qualify for premium tax credits if the employer plan is considered unaffordable or fails the minimum value test. For plan years beginning in 2027, employer coverage is affordable if the employee-only premium is no more than 10.22% of household income (it was 9.96% in 2026).
The default assumption is that employer coverage automatically beats a marketplace plan, because the employer is paying part of it. Sometimes that’s true. Often it isn’t, once you actually run both numbers side by side instead of comparing a payroll deduction to a sticker price.
Here is how to compare them properly, including a rule most employees never hear about: an employer offer does not always cut you off from a subsidy.
The affordability test
The IRS sets an “affordability” threshold each year for employer-sponsored coverage. An employer plan is considered affordable if the employee’s share of the employee-only premium is no more than a set percentage of household income: 9.96% for 2026 and 10.22% for plan years beginning in 2027 (see IRS Revenue Procedure 2026-26). The plan must also meet the minimum value test, meaning it covers at least 60% of the average cost of covered benefits.
If your employer’s cheapest self-only plan costs more than that as a share of your income, the coverage is treated as unaffordable — and you may be eligible to decline it and shop the marketplace with a premium tax credit instead, even though an offer exists. Most employees never check this, because the payroll deduction feels small next to the sticker price of an individual plan.
A Worked Example of the 2027 Affordability Test
This is an illustration, not a quote. Suppose a single employee has household income of $60,000. At the 2027 threshold of 10.22%, an employee-only premium is affordable if it costs no more than $6,132 a year, or $511 a month ($60,000 x 10.22% / 12).
| Employee-only premium | Yearly cost | Affordable at 10.22%? | What it means |
|---|---|---|---|
| $480 a month | $5,760 | Yes | The offer is affordable, so no premium tax credit |
| $520 a month | $6,240 | No | The offer is unaffordable, so you may decline it and claim a credit if your income qualifies |
For 2027 coverage, one person can qualify for a premium tax credit with household income up to $63,840, so the $60,000 in this example is within range. The plan must also meet minimum value, meaning it pays at least 60% of covered costs and provides substantial coverage of hospital and physician services. Employers can use separate safe harbors to test affordability for their own penalty purposes, but your credit eligibility is tested against your household income.
Where it gets less generous for families
The affordability test above is based on employee-only cost, not family cost. A 2023 rule change (often called the “family glitch” fix) means your spouse and dependents are now tested separately, against the cost of covering the whole family — which is frequently far less affordable than the employee-only figure suggests.
Practically: it’s entirely possible for your own coverage to be affordable through your employer while your spouse and kids are not, making them separately eligible for marketplace subsidies even though you keep the employer plan yourself.
Employer Plan vs Marketplace Plan at a Glance
| Factor | Employer plan | Marketplace plan |
|---|---|---|
| Premium | Employer usually pays part, and your share is often paid with pre-tax pay | You pay the premium after any premium tax credit |
| Income-based savings | None | Premium tax credit and cost-sharing reductions if you qualify |
| When you can enroll | Your employer’s open enrollment or a qualifying life event | Open Enrollment starting November 1 or a qualifying life event |
| Family coverage | Priced as a family tier, which can be expensive | Each person is priced by age, and the credit is based on household income |
| Choice of plans | Whatever the employer offers | Many plans and networks to compare |
| Portability | Usually ends when the job ends | Stays with you if you change jobs |
Build the real comparison
Sticker prices don’t tell you what a plan actually costs you. Use the same formula for both options:
(Premium you pay x 12) + realistic deductible and copay usage, capped by the out-of-pocket maximum.
Run it twice for each plan: once assuming a normal year, once assuming a bad one. Employer plans often win on deductible and out-of-pocket maximum because group risk pools tend to be priced more favourably. Marketplace plans, especially with a full subsidy applied, can still win on total annual cost even with a thinner network. Neither assumption holds universally — that’s the entire reason to run the numbers rather than default to whichever one sounds simpler.
Our guide to choosing a marketplace plan walks through the same total-cost approach in more depth, including cost-sharing reductions, which only apply on the marketplace side.
Don’t forget your actual subsidy number
None of this comparison means much without knowing what you’d actually pay on the marketplace. That depends on where your household lands against the 2027 income rules, which reverted to a stricter structure after the enhanced subsidies expired at the end of 2025. We break that down fully in ACA subsidy eligibility for 2027.
Questions to Ask Your Employer Before You Decide
- What do employee-only and family coverage cost per month, and how much does the employer contribute toward dependents?
- Can I see the Summary of Benefits and Coverage, and does the plan meet minimum value?
- What are the deductible and the out-of-pocket maximum?
- Is an HSA or FSA offered, and does the employer contribute?
- When is the enrollment deadline, and can I change my choice mid-year?
If you’re the employer: where ICHRA fits in
Small business owners have a third option worth knowing about before assuming group health is the only way to offer benefits. An Individual Coverage Health Reimbursement Arrangement (ICHRA) lets you give employees a defined, tax-free allowance to buy their own marketplace or individual plan, rather than buying one group policy for everyone.
It shifts the affordability question onto each employee’s own household circumstances instead of a single group rate, which can change who is eligible for a subsidy on top of the allowance. We compare the two directly in ICHRA vs. group health insurance, and you can read more about how ICHRA works.
If this is happening mid-year
This comparison usually comes up because something changed — a new job, a job loss, or an employer plan you’re newly eligible for. Starting or losing employer coverage is typically a qualifying life event, which opens a 60-day window to enroll in a marketplace plan without waiting for Open Enrollment. See our Special Enrollment Period guide for the full list of qualifying events and what documentation you’ll need.
Frequently Asked Questions
Can you get Marketplace insurance if your employer offers insurance?
Yes, you can always buy a Marketplace plan, but you only qualify for premium tax credits if your employer coverage is unaffordable or fails the minimum value test. Without credits you pay the full price of the plan.
Can I decline my employer plan and still get a subsidy?
Only if the employer coverage fails the affordability test or the minimum value test for you, or for the family members you would be covering. If it passes, declining it does not open up subsidy eligibility on the Marketplace.
What is the employer affordability threshold for 2027?
For plan years beginning in 2027, employer coverage is affordable if the employee-only premium is no more than 10.22% of household income. The 2026 figure was 9.96%.
Does my employer have to tell me if their plan is affordable?
Employers must give employees a notice about the Marketplace, and employers with 50 or more full-time employees report their coverage offers to the IRS. But the affordability test depends on your household income, which your employer does not know, so you need to run that check yourself or with an advisor.
Is employer health insurance cheaper than the Marketplace?
Not always. Employer plans often win on deductibles and out-of-pocket limits, while Marketplace plans with a subsidy can win on total annual cost. Compare premium, deductible and likely usage for both before deciding.
What if I am self-employed with no employer offer?
Then this comparison does not apply directly. You are evaluated on the standard Marketplace subsidy rules, and the self-employed health insurance deduction interacts with the income figure used for eligibility.
Can I switch from my employer plan to the Marketplace in the middle of the year?
Usually only with a qualifying life event, such as losing your employer coverage. Choosing to drop coverage is not a qualifying event, so you would generally wait for Open Enrollment.
Do I have to take my employer health plan?
No, enrollment is optional. But if the plan is affordable and meets minimum value, declining it means you cannot receive premium tax credits for a Marketplace plan.
Can my spouse and children get Marketplace subsidies if I have employer coverage?
Possibly. Their eligibility is tested against the cost of family coverage, not the employee-only cost. If family coverage costs more than 10.22% of household income for 2027, they may qualify even when your own offer is affordable.
Get both numbers run properly
This comparison has more moving parts than it looks like from the outside — affordability tests, the family glitch fix, subsidy cliffs, and (for business owners) ICHRA versus group. Get in touch and we’ll run your specific numbers on both sides before you have to decide anything during Open Enrollment.
This article is general information, not personalised advice. Affordability thresholds, subsidy eligibility and plan availability depend on your income, household, employer plan design and current law.
