Millions of workers assume that declining their job's health plan automatically opens the door to a subsidized Marketplace policy. It does not. The ACA's employer-coverage rule, often called the firewall, blocks a premium tax credit for anyone who is offered coverage that is both affordable and meets minimum value, whether or not that person actually enrolls in it. Getting this wrong is one of the most common reasons Marketplace enrollees end up owing back a credit at tax time.
This guide walks through the exact 2026 affordability threshold, how the family glitch fix changed the rules for spouses and dependents, when a small employer or an unenrolled COBRA offer does not count, and what to do if your employer's plan blocks your subsidy. For the broader income picture, see who qualifies for ACA subsidies and what counts as income for ACA subsidies.
Coverage Breakdown
| Your employer-coverage situation | PTC eligible for you? | Why | 2026 rule |
|---|---|---|---|
| Affordable self-only offer (9.96% or less of income) that meets minimum value | No | The offer counts as available affordable coverage, whether or not you enroll | IRS Rev. Proc. 2025-25 sets the 9.96% threshold for 2026 |
| Self-only offer costs more than 9.96% of household income | Yes | Offer is unaffordable, so the firewall does not apply | Applies even if the employer pays most of the premium in dollar terms |
| Self-only offer is affordable but fails minimum value | Yes | Both the price test and the 60% value test must pass to block a subsidy | Check Form 1095-C code or the plan's summary of benefits and coverage |
| Family coverage costs more than 9.96% of household income (family glitch fix) | You: no. Family: possibly | Family affordability is tested independently of the employee's self-only test | Family glitch fix in effect since January 1, 2023 and still active in 2026 |
| No employer offer at all (small employer or part-time job) | Yes | No offer exists, so there is nothing to compare against 9.96% | Employers with under 50 full-time-equivalent employees have no offer mandate |
| Enrolled in COBRA or retiree health coverage | No | Actual enrollment in either counts as having other coverage | Merely being eligible for COBRA or retiree coverage, without enrolling, does not block PTC |
An employer offer must fail either the affordability test (more than 9.96% of household income in 2026 per IRS Rev. Proc. 2025-25) or the minimum value test (below 60% of covered costs) for a premium tax credit to become available. Passing both tests blocks a subsidy regardless of whether the employee enrolls.
Source: IRS Rev. Proc. 2025-25; Healthcare.gov Marketplace Eligibility; KFF Employer Coverage and Premium Tax Credit Explainer 2026
Direct answer
No. Employer-sponsored coverage that costs 9.96% or less of your 2026 household income for self-only coverage, and meets the ACA's 60% minimum value standard, blocks a premium tax credit for you, even if you skip the plan and buy Marketplace coverage instead. An unaffordable offer, a plan that fails minimum value, or no offer at all can still leave you eligible. Family members are tested separately under the 2023 family glitch fix.
What Counts as 'Affordable' in 2026
Affordability starts with a single IRS number. Under Revenue Procedure 2025-25, an employer's health plan is affordable for 2026 if the premium the employee pays for the cheapest self-only option is 9.96% or less of household income, up from 9.02% in 2025. A household earning $50,000 in 2026 clears the affordability test if the employee-only premium is $4,980 a year, or about $415 a month, or less. That figure looks only at the self-only premium; the cost of adding a spouse or children is irrelevant to the employee's own eligibility test.
Minimum value is the second test, and both must be met before an employer offer blocks a subsidy. A plan meets minimum value if it is designed to pay at least 60% of the total allowed cost of covered benefits and includes substantial coverage of physician and inpatient hospital services. Most standard employer group plans clear this bar easily. The exception is a bare-bones limited-benefit or fixed-indemnity plan that some employers layer on top of, or instead of, real coverage. An affordable offer that fails minimum value does not block a premium tax credit, even though the price alone looks reasonable.
The Family Glitch Fix: Family Coverage Gets Tested Separately
Family coverage used to ride on the same 9.96% test as self-only coverage, and that created what advocates called the family glitch. Before 2023, the IRS only checked whether the employee's own self-only coverage was affordable, so a $200-a-month self-only premium could pass easily while adding a spouse and two kids pushed the family premium to $1,800 a month, well over 40% of household income, with no subsidy available to fix it. A final IRS rule effective January 1, 2023 fixed this gap, and the fix remains in place for 2026.
Family affordability is now its own test. If the portion of the premium the employee would pay for family coverage exceeds 9.96% of household income in 2026, the employee's spouse and dependents can shop the Marketplace and claim a premium tax credit, even though the employee stays blocked because their own self-only offer is affordable. Coverage codes on the employer's Form 1095-C often signal which test applies; a benefits administrator or HR representative can confirm the actual dollar premiums for both the self-only and family tiers.
Eligibility, Not Enrollment, Is What Blocks the Subsidy
Marketplace eligibility rules follow what you were offered, not what you signed up for. Declining an affordable, minimum-value employer plan and buying an ACA-compliant Marketplace policy with a premium tax credit anyway is not allowed. Healthcare.gov asks directly whether an offer of job-based coverage exists and whether it meets the price and value tests; answering that question incorrectly, intentionally or not, is a common reason a household later owes back an advance premium tax credit at tax time. Employers with 50 or more full-time-equivalent employees, called applicable large employers, generally must offer affordable, minimum-value coverage or risk a penalty under Internal Revenue Code Section 4980H if even one employee receives a subsidy.
Two carve-outs matter. First, employers with fewer than 50 full-time-equivalent employees are not required to offer coverage at all; if yours does not, no employer offer exists and the firewall never applies. Second, COBRA continuation coverage and retiree health coverage only count against you if you are actually enrolled, not merely eligible. Someone who qualifies for COBRA after a layoff but never enrolls can still shop the Marketplace for a subsidized plan. The same eligibility rule extends past employer coverage: anyone eligible for Medicare, including Original Medicare Part A alone, Medicaid, CHIP, or TRICARE also loses premium tax credit eligibility, regardless of employer status.