Becoming eligible for an employer health plan in 2026 does not cancel your Marketplace plan automatically, and it does not open a new Marketplace Special Enrollment Period (SEP). Employer eligibility changes one thing: whether you can keep receiving the premium tax credit (PTC). Under IRS Rev. Proc. 2025-25, an employer plan is affordable for 2026 when the employee-only premium costs no more than 9.96% of household income, and the plan must also meet the 60% minimum value standard. If the offer passes both tests, you lose PTC eligibility for every month the offer exists, even if you never enroll. If the offer fails either test, you can keep your Marketplace plan and your subsidy. New hires, workers moving from part-time to full-time, and employees whose waiting period just ended all face this decision against a short employer enrollment window, commonly 30 days, while the Marketplace policy keeps billing until you end it at healthcare.gov. This page walks through the decision in order, from checking affordability to ending the Marketplace plan without a coverage gap.
Staying on subsidized Marketplace coverage after an affordable employer offer is the costliest mistake in this situation. The Marketplace reports your advance premium tax credit on Form 1095-A, and you reconcile it on IRS Form 8962 at tax time. Months in which you were offered affordable, minimum value employer coverage are months in which you were not eligible for the PTC, so the credit for those months must be repaid, and the repayment caps that protect lower-income filers do not shield ineligible months. Healthcare.gov explains that the Marketplace does not check your employer offer on its own, which is why the repayment surprise arrives a year later. KFF's 2025 Employer Health Benefits Survey tracks average worker contributions for single and family coverage, a useful benchmark when you compare your own offer. Medicaid and CHIP sit outside this test entirely: if your 2026 income is low enough, state programs such as Medi-Cal, AHCCCS, or MassHealth can cover you year-round at little or no cost, even when an employer plan is available.
6 Steps to Get Coverage
Common Mistakes That Cost People Thousands
Five mistakes cost people the most after they become eligible for an employer plan in 2026:
- Keeping the subsidized Marketplace plan after an affordable offer. Premium tax credits received for those months must be repaid on Form 8962 when you file 2026 taxes.
- Assuming that declining the employer plan protects your subsidy. The IRS tests the offer, not your enrollment, so a declined affordable offer still ends PTC eligibility.
- Ending the Marketplace plan before employer coverage is confirmed. A gap appears if the employer start date slips or the enrollment form is rejected.
- Testing affordability with the family premium for your own coverage. Your own offer uses the employee-only premium, while family members are tested against the family premium.
- Dropping the employer plan later and expecting to return to the Marketplace. Leaving voluntarily is not a qualifying life event, so re-entry waits for open enrollment beginning November 1, 2026.
The 2026 Employer Affordability Test: 9.96% of Household Income
Affordability for 2026 is measured against household income, not the salary your employer pays you. IRS Rev. Proc. 2025-25 sets the 2026 affordability percentage at 9.96%, up from 9.02% in 2025, and the Marketplace uses the same percentage to decide whether an employer offer blocks your premium tax credit. The test compares the lowest-cost employee-only plan that meets minimum value against 9.96% of your modified adjusted gross income (MAGI). Household income includes your spouse and tax dependents who must file. The table below turns the 2026 percentage into a monthly premium cap, so you can check your benefits sheet in under a minute. A premium above the cap means the employer offer is unaffordable and you may keep your Marketplace subsidy, while a premium at or below the cap ends your PTC eligibility for every month the offer is open.
Maximum affordable employee-only premium at 9.96% of household income, 2026| 2026 household income | Maximum monthly premium (9.96%) | Maximum yearly premium (9.96%) |
|---|
| $30,000 | $249 | $2,988 |
| $40,000 | $332 | $3,984 |
| $50,000 | $415 | $4,980 |
| $60,000 | $498 | $5,976 |
| $80,000 | $664 | $7,968 |
| $100,000 | $830 | $9,960 |
Caps apply to the employee-only premium for the lowest-cost plan that meets 60% minimum value. Dependents are tested against the family premium. Source figures use the 2026 affordability percentage of 9.96%.
Source: IRS Rev. Proc. 2025-25 (irs.gov)
Medicaid and CHIP Can Still Cover You in 2026 Despite an Employer Offer
Medicaid eligibility turns on income, not on whether an employer plan exists. In the 40 expansion states plus DC, adults qualify at 138% of the Federal Poverty Level, which is $22,025 for one person and $45,540 for a family of 4 in 2026. State programs carry local names: California's Medi-Cal, Arizona's AHCCCS, Massachusetts's MassHealth, Wisconsin's BadgerCare, Connecticut's HUSKY Health, and New Jersey's NJ FamilyCare. Medicaid enrollment is year-round per medicaid.gov, so no 30-day clock applies. Children often qualify for CHIP at higher incomes, commonly 200% to 300% FPL in 2026 depending on the state, which can leave you on the employer plan while your children use CHIP at low or no cost. Marketplace states such as Minnesota (MNsure) and Kentucky (kynect) will screen Medicaid and CHIP eligibility during the same application. Check the Medicaid screen before paying employer premiums that may be unnecessary for dependents.
How to End Marketplace Coverage Without a Gap or a 2026 Tax Bill
Marketplace coverage ends only when you ask for it to end. An employer offer does not reach the Marketplace automatically, and healthcare.gov keeps charging your premium and sending the advance premium tax credit to your insurer until you terminate the plan. Start by confirming employer coverage in writing, then request a Marketplace end date on or after the day before the employer plan begins, which prevents both a gap and a double-paid month. If your employer coverage starts on the first of a month, an end date of the last day of the prior month is the cleanest handoff. After you cancel, the Marketplace reports your coverage months on Form 1095-A, and Form 8962 reconciles the credit at tax time. Prior-employer COBRA ends when you join another group health plan, so a COBRA subscriber who becomes eligible for a new employer plan should confirm the COBRA termination date as well. Re-entry is the final risk: leaving the employer plan voluntarily is not a qualifying life event, so a new Marketplace plan requires open enrollment starting November 1, 2026 for 2027 coverage. In HealthCare.gov states, enrolling by December 15, 2026 starts coverage January 1, 2027, and open enrollment ends January 15, 2027; state exchanges set their own end dates, so confirm yours at healthcare.gov.
Employer-funded ICHRA offers follow different rules from group plans. An Individual Coverage HRA lets the employer reimburse a Marketplace plan, and a new ICHRA offer opens a Marketplace SEP of 60 days that can start up to 60 days before the benefit begins. Employees offered an ICHRA keep a Marketplace plan but lose the premium tax credit if the ICHRA is affordable, so the same 1095-A and Form 8962 reconciliation applies. Ask HR whether the offer is a group plan or an ICHRA before you cancel anything, because the answer changes whether you end the Marketplace policy or simply change how it is paid.
Frequently Asked Questions
Is there a Special Enrollment Period when I become eligible for an employer plan?
No. Becoming eligible for employer coverage is not a qualifying life event for the Marketplace, so no new Marketplace Special Enrollment Period opens. The deadline that matters is your employer's enrollment window, which most employers set at 30 days from your eligibility date. If your eligibility date is November 1, 2026, the window typically runs November 1 through December 1, 2026. Your existing Marketplace plan stays active until you end it at healthcare.gov, and the only Marketplace SEP tied to employers is the 60-day window created by a new ICHRA offer. Confirm the exact dates with HR in writing.
How do I document the employer offer and my decision to drop Marketplace coverage?
Collect the employer benefits sheet showing the 2026 employee-only and family premiums, an HR email confirming your start date and minimum value status, and your projected 2026 household income. Keep the healthcare.gov termination confirmation and your Form 1095-A. These records support the Form 8962 reconciliation if the IRS or the Marketplace ever asks why you ended or kept subsidized coverage. Store digital copies of each document for at least three years after you file 2026 taxes.
What if I miss the employer enrollment window?
Missing the employer window generally means waiting for the employer's next open enrollment, unless you have a qualifying life event such as marriage, birth, or loss of other coverage. Do not end your Marketplace plan until your employer coverage is confirmed. If you already ended it, you may have no coverage until the Marketplace open enrollment that begins November 1, 2026 for 2027 plans, because leaving coverage voluntarily is not a qualifying life event. Medicaid and CHIP remain available year-round if your income qualifies.
Can I get retroactive coverage from the employer plan or the Marketplace?
Employer plans are not retroactive. Coverage begins on the effective date your plan sets, often the first of the month after you enroll or after the waiting period ends. Marketplace cancellations can be set to a date you choose, but you cannot backdate a cancellation to erase premiums already billed for past months. Medicaid is the exception: many states cover medical bills from up to 3 months before your application month if you were eligible then. Time your Marketplace end date to the day before employer coverage begins.
What is the difference between COBRA, the Marketplace, and the employer plan?
COBRA continues a prior employer's plan at 102% of the full premium, so it rarely beats a new employer plan. The employer plan usually costs the least when the employee-only premium is within the 9.96% cap for 2026. A Marketplace plan with a subsidy is best when the employer offer is unaffordable or below the 60% minimum value standard. COBRA ends automatically when you become covered under another group health plan, so confirm your COBRA end date with the administrator once your new coverage starts.
What state-specific rules apply when I become eligible for an employer plan?
The 9.96% affordability test and PTC rules are federal and apply in every state. State differences show up elsewhere. Medicaid expansion covers adults to 138% FPL in 40 states plus DC under names such as Medi-Cal, AHCCCS, and MassHealth, while 10 non-expansion states use stricter limits. Some state exchanges, including MNsure in Minnesota and kynect in Kentucky, set their own open enrollment end dates for 2027 plans. State mini-COBRA laws can extend continuation coverage for small employers. Check your state's Marketplace or Medicaid agency for local rules.
Do I qualify for Medicaid after becoming eligible for an employer plan?
Possibly. Medicaid depends on income and household size, not on an employer offer. In expansion states, a single adult qualifies at about $22,025 and a family of 4 at about $45,540 in 2026, which is 138% of the Federal Poverty Level. Apply year-round through your state agency or healthcare.gov. If you qualify, Medicaid can be free, and some states let you keep it alongside an employer plan. Compare your 2026 income against the income-limit tables before paying employer premiums.
What happens to my children's coverage when I become eligible for an employer plan?
Your children can stay on a Marketplace plan with a subsidy if the employer's family premium is above the 9.96% cap for 2026, thanks to the IRS family glitch fix. They may also qualify for CHIP, which covers children at higher incomes than adult Medicaid in every state, commonly 200% to 300% FPL in 2026. CHIP enrollment is year-round with low or no premiums. If the employer family tier is affordable, add the children to the employer plan within the enrollment window.
