For years, millions of American families got locked out of marketplace subsidies by a quirk in the law known as the "family glitch." In 2022, the IRS issued a final rule to fix it, and as of 2026 that fix is fully in force. If your employer offers health coverage, but adding your spouse or children would cost more than 9.96% of your household income, your family members may now qualify for premium tax credits through the ACA marketplace, even if your own coverage is considered affordable.
Quick Answer: The ACA family glitch fix (effective December 12, 2022) lets family members access marketplace subsidies when employer-sponsored family coverage is unaffordable, even if the employee's self-only plan is affordable. The 2026 affordability threshold is 9.96% of household income. As of 2026, the subsidy cliff has also returned. Marketplace premium tax credits cut off at 400% FPL, meaning income limits matter more than they did from 2021 to 2025.
What Was the Family Glitch?
From 2014 through 2022, the IRS measured "affordability" of employer-sponsored insurance using only the cost of employee-only coverage. If that premium was below the affordability threshold, the entire family was blocked from marketplace subsidies, even if adding a spouse and kids to the employer plan cost thousands of dollars more per year.
The practical result: a worker whose self-only premium was $150/month might be considered "covered" by affordable insurance. But adding their family might push the monthly bill to $900. Under the old rule, the family still did not qualify for marketplace help. An estimated 5.1 million Americans were affected according to research cited by the Kaiser Family Foundation.
The final IRS rule, published October 2022 and effective December 12, 2022, separated the affordability test for employees from the test for family members. Each is now evaluated on its own.
How the Family Glitch Fix Works in 2026
Under the fixed rule, affordability is determined separately for:
- The employee, based on the cost of self-only coverage relative to household income.
- The family, based on the cost of the lowest-cost plan that covers the employee AND eligible family members.
If the family coverage cost exceeds 9.96% of the household's modified adjusted gross income (MAGI) in 2026, the family plan is considered unaffordable. Spouses and dependents claimed on the household's tax return can then shop for subsidized marketplace coverage through healthcare.gov.
The 9.96% threshold is set annually by the IRS. For 2026 it is 9.96% (technically 9.962%), per IRS guidance published by Risk Strategies.
Who Counts as "Family"?
The IRS defines eligible family members as:
- A spouse, if you file taxes jointly
- Dependents you claim on your current-year federal tax return
Adult children who are not claimed as dependents cannot use this rule to access marketplace subsidies via the family glitch fix. They would need to qualify on their own.
2026 ACA Income Limits: The Subsidy Cliff Is Back
This is critical context for 2026. From 2021 through 2025, enhanced premium tax credits under the American Rescue Plan Act (ARPA) and Inflation Reduction Act (IRA) removed the upper income cap. Congress did not extend those enhancements. As a result, the 2026 marketplace returns to the original subsidy rules:
- Premium tax credits are available to households with income between 100% and 400% of the federal poverty level (FPL)
- Cost-sharing reductions (CSRs, which lower deductibles on Silver plans) are available up to 250% FPL
- Above 400% FPL, no subsidies apply. The "subsidy cliff" that existed before 2021 is back
The table below uses the 2025 FPL guidelines (the ACA uses the prior year's poverty line to calculate current-year subsidies, per healthcare.gov).
2026 ACA Marketplace Income Limits by Household Size
| Household Size | 100% FPL (minimum) | 250% FPL (CSR cutoff) | 400% FPL (subsidy cutoff) |
|---|
| 1 | $15,650 | $39,125 | $62,600 |
| 2 | $21,150 | $52,875 | $84,600 |
| 3 | $26,650 | $66,625 | $106,600 |
| 4 | $32,150 | $80,375 | $128,600 |
| 5 | $37,650 | $94,125 | $150,600 |
| 6 | $43,150 | $107,875 | $172,600 |
| 7 | $48,650 | $121,625 | $194,600 |
| 8 | $54,150 | $135,375 | $216,600 |
| Each additional | +$5,500 | +$13,750 | +$22,000 |
2026 ACA Marketplace Income Limits, based on 2025 Federal Poverty Level guidelines per ASPE/HHS
For expanded Medicaid states, the effective floor is 138% FPL (not 100%). If your income falls between 100% and 138% FPL in a Medicaid expansion state, you would typically qualify for Medicaid rather than marketplace subsidies. See coveredusa.org/aca-income-limits for a full breakdown.
How Much Do Subsidies Change at 200% vs 400% FPL in 2026?
The premium tax credit scales with income. Under 2026 rules (without enhanced APTCs), households contribute a set percentage of their income toward the benchmark Silver plan premium:
| Income Level (% FPL) | Required Contribution (2026) |
|---|
| 100 to 133% | 0% of income |
| 133 to 150% | 0 to 2% of income |
| 150 to 200% | 2 to 6% of income |
| 200 to 250% | 6 to 8.06% of income |
| 250 to 300% | 8.06 to 9.78% of income |
| 300 to 400% | 9.78% of income (capped) |
| Above 400% | No premium tax credit |
Source: Health Reform Beyond the Basics, Coverage Year 2026 guidelines
This is a significant change from 2025. A household at 200% FPL contributed about 2% of income in 2025. In 2026, that household contributes up to 6.6%. Check coveredusa.org/aca-income-limits to see where your income falls.
A Practical Example: Does Your Family Qualify?
Say Maria works full-time. Her employer offers self-only coverage at $180/month, which is affordable. Adding her husband and two kids costs $950/month. The household's annual MAGI is $72,000.
Step 1: Is the family plan affordable?
- 9.96% of $72,000 = $7,171.20 per year, or $597.60 per month
- Maria's employer charges $950/month for family coverage
- $950 is greater than $597.60, so the plan is unaffordable for the family
Step 2: Are the family members income-eligible for marketplace subsidies?
- $72,000 for a family of 4 = approximately 224% FPL
- That falls below the 400% FPL cap ($128,600 for a family of 4)
- Maria's husband and children qualify for a premium tax credit
Maria can keep her own employer coverage. Her husband and kids can enroll in a marketplace plan with a subsidy. This is exactly the situation the family glitch fix was designed to address.
How to Apply: Step-by-Step for 2026
Open Enrollment for 2026: November 1 through January 15 (most states). Special Enrollment Periods (SEPs) are available year-round for qualifying life events such as losing other coverage, moving, or changes in household size.
Documents you will need:
- Social Security numbers for all family members applying
- Proof of income (recent pay stubs, last year's tax return)
- Information about any employer health plan offered (plan documents or a letter from HR showing the cost of family coverage)
- Immigration documentation if applicable
- Birth certificates or proof of dependent status for children
Application steps:
- Go to healthcare.gov (or your state's marketplace if you live in a state-run exchange).
- Create an account or log in to an existing one.
- Start a new application. Select "Apply for health coverage" and enter your household information.
- Enter income for everyone in the household who files taxes with you.
- When asked about employer coverage, enter the cost of the lowest-cost family plan offered by your employer. This is key, because the system will automatically test whether family coverage is affordable under the 9.96% threshold.
- Review the eligibility results. If your family members qualify for premium tax credits, you will see available plans and estimated monthly premiums after subsidies.
- Compare plans across metal tiers (Bronze, Silver, Gold). If your income is at or below 250% FPL, Silver plans often have the best value because of cost-sharing reductions.
- Select a plan and confirm enrollment. Coverage starts based on when you enroll (enrollments by the 15th of a month generally start the 1st of the following month).
Common reasons applications get denied or reduced:
- Income entered does not match IRS records (reconciled at tax time via Form 8962)
- Employer coverage is entered incorrectly. Use the cost of family coverage, not self-only
- Household members are not listed as dependents on your tax return
- You live in a Medicaid expansion state and your income qualifies you for Medicaid instead
Check your eligibility in about 2 minutes at CoveredUSA. Run your free screener at /screener
The Subsidy Cliff: What Families Above 400% FPL Can Do in 2026
If your household income is above 400% FPL, you will not receive a premium tax credit in 2026 unless Congress restores the enhanced subsidies. Options include:
- Short-term health plans: Less comprehensive than ACA plans, but lower premiums. Not subject to the same coverage rules.
- Health sharing ministries: Not insurance, not regulated the same way, but used by some families as a cost-sharing alternative.
- Employer coverage: If your employer's family plan meets the affordability test (under 9.96% of income), that is your best regulated option.
- HSA-eligible high-deductible plans: Marketplace or employer plans that pair with a Health Savings Account can reduce out-of-pocket costs for higher-income families.
Frequently Asked Questions
What is the ACA family glitch?
The ACA family glitch was a rule that blocked families from marketplace subsidies if the employee's self-only employer coverage was affordable, even when the cost of adding the family to the employer plan was very high. It affected roughly 5.1 million Americans before the 2022 IRS fix.
When did the family glitch fix take effect?
The IRS finalized the rule in October 2022. It took effect December 12, 2022, and applies to coverage years starting in 2023 and beyond, including 2026.
What is the 2026 affordability threshold for employer coverage?
The 2026 IRS affordability threshold is 9.96% (9.962%) of household income. If the cost of the lowest-cost family plan offered by an employer exceeds that percentage of the household's MAGI, the plan is considered unaffordable and family members can seek marketplace subsidies.
Can the employee also get marketplace subsidies?
No. The employee's affordability is still judged by the cost of self-only coverage. If the employee's self-only premium is affordable (below 9.96% of household income), the employee is not eligible for marketplace premium tax credits. Only the family members are affected by the family glitch fix.
Do I have to drop my employer coverage to use this rule?
No. The employee can keep their own employer plan. Only the family members who are not being offered affordable family coverage need to enroll in the marketplace.
Is the family glitch fix still in place in 2026?
Yes. The family glitch fix is an IRS regulation, not a Congressional program enhancement. Unlike the enhanced premium tax credits (which expired after 2025), the family glitch fix remains in effect for 2026 and beyond unless reversed by future rulemaking.
What income counts for the ACA affordability test?
The ACA uses modified adjusted gross income (MAGI), which is your adjusted gross income plus tax-exempt Social Security benefits, tax-exempt interest, and excluded foreign income. For most households, MAGI is close to your total household income as reported on your W-2s and other income sources.
What if my employer never tells me the cost of family coverage?
You have a right to request a Summary of Benefits and Coverage (SBC) and cost information from your employer's HR department. The employer is required to provide this under ERISA. When you apply on healthcare.gov, you will need to enter this figure accurately.
What happens if my income changes during the year?
Report income changes to the marketplace as soon as possible. If your income changes and you received too large a subsidy, you may owe money back at tax time. If your income drops, you may be entitled to a larger subsidy. Use the marketplace account update feature or call 1-800-318-2596.
Where can I check if my family qualifies?
Use the free eligibility screener at coveredusa.org/screener. It asks about household size, income, and employer coverage details to tell you in about 2 minutes whether your family qualifies for marketplace subsidies or Medicaid.
