The client clears the income test. They clear the tax filing status test. The broker runs the APTC estimate and the number looks right. Then someone asks whether the client has access to employer coverage, and the answer is yes, and the coverage is affordable. The APTC goes away. This is the affordability test, and it catches brokers who skip the employer coverage question at intake.
Key Takeaways
- The ACA affordability test checks whether the employee's share of the lowest-cost self-only employer plan exceeds the IRS applicable percentage of household income. If it does not, the employer plan is considered affordable and the employee cannot claim APTC.
- The minimum value test is separate: an employer plan must cover at least 60 percent of expected health costs (60 percent actuarial value) to count as minimum essential coverage.
- The family glitch rule was fixed by an IRS rule effective January 2023. Before that fix, family members were often ineligible for APTC because the affordability test used only the cost of self-only coverage, even when family coverage was unaffordable.
- An employee with access to affordable, minimum-value employer coverage cannot claim APTC for themselves. If family plan coverage fails the affordability test, dependents and spouses may qualify for APTC on the Marketplace.
- Brokers who skip the employer coverage question at intake produce subsidy estimates that Marketplace verification will contradict. The income question is not enough.
What the affordability test actually measures
The ACA Advance Premium Tax Credit is available to households whose income falls within the eligible range and who do not have access to other minimum essential coverage. Employer-sponsored coverage counts as other coverage, but only when it meets two thresholds: the affordability test and the minimum value test.
The affordability test compares the employee's required contribution for the lowest-cost self-only plan to a percentage of household income set by the IRS each year. The IRS calls this the applicable percentage. It adjusts annually based on premium growth. For recent plan years the threshold has ranged between roughly 8 and 9 percent of household income. When the employee's share of self-only coverage falls at or below that percentage of household income, the plan is considered affordable and the employee cannot claim APTC.
The minimum value test is separate. An employer plan must pay at least 60 percent of the total allowed costs of covered benefits to qualify as minimum essential coverage under the ACA. A plan that fails this threshold does not block APTC eligibility regardless of the premium. Both tests must be passed together for employer coverage to close off Marketplace subsidies.
For a grounding in how APTC eligibility works in the absence of employer coverage, read whether a client qualifies for an ACA subsidy in 2026.
Running the test at intake
The two questions: does the client or their spouse have access to employer-sponsored coverage, and if so, what is the monthly premium for employee-only enrollment in the lowest-cost plan?
Most clients know their paycheck deduction for health insurance but not the full employer contribution. The affordability test uses the employee-only deduction, not the total plan premium. Clients who report a low deduction may still have an affordable plan under the test. Clients who report a high deduction may have an unaffordable plan that opens the door to APTC.
Example: A client earning $48,000 has a self-only employer plan option at $200 per month, or $2,400 per year. If the applicable percentage for the plan year is 9 percent of income, the threshold is $4,320. The client's $2,400 contribution is below that. The plan is affordable. The client cannot claim APTC. Run the same test with a $400 per month self-only premium, or $4,800 per year. That exceeds the $4,320 threshold. The plan is not affordable. The client can claim APTC on the Marketplace for their own coverage.
Illustrative example. The applicable percentage is adjusted by the IRS annually. Use current IRS guidance for the specific plan year. Actual APTC amounts depend on household size, income, and rating area.
Four scenarios brokers encounter
| Scenario | Affordability test | Minimum value | APTC eligible? |
|---|---|---|---|
| Self-only employer plan costs $150/month; household income at 250% FPL | Run the math: $150/month is $1,800/year. If the applicable percentage of household income exceeds $1,800, the plan is affordable. At 250% FPL for a single adult (~$36,450), 9% is $3,280. $1,800 is under that. Affordable. | Plan covers 65% of costs. Passes. | No. Employer plan is affordable and meets minimum value. |
| Self-only employer plan costs $550/month; household income at 250% FPL | $550/month is $6,600/year. At the same 250% FPL income ($36,450), the applicable percentage threshold is ~$3,280. $6,600 exceeds that. Not affordable. | Plan covers 70% of costs. Passes. | Yes. Employer plan is unaffordable. Employee can claim APTC on the Marketplace. |
| Self-only employer plan is affordable; family coverage costs $900/month | Self-only test: affordable. Family coverage test (post-2023 rule): $900/month family cost exceeds the applicable percentage of household income for most households. | Plan covers 70% of costs. Passes. | Employee: No (self-only is affordable). Spouse and dependents: possibly yes, because family coverage fails the affordability test. Run separately. |
| Employer plan covers 55% of expected costs | Premium may be technically affordable. | 55% actuarial value. Fails the 60% minimum value threshold. | Yes for everyone. Plan does not meet minimum value, so employer coverage does not block APTC regardless of premium. |
Illustrative scenarios. The applicable percentage and FPL figures are adjusted annually. Verify with current IRS guidance and CMS FPL tables for the plan year.
The family glitch fix (effective January 2023)
Before 2023, the ACA had a known issue: the affordability test for family members was evaluated against the cost of self-only coverage, not the cost of family coverage. This meant a family could be in a situation where the employee's self-only premium was affordable but adding the family to the employer plan cost $900 per month. Under the pre-2023 rule, the spouse and children could not claim APTC because the self-only premium was technically affordable.
An IRS rule effective January 2023 changed this. Family member eligibility for APTC is now evaluated separately based on the cost of family coverage. If family coverage fails the affordability test even though self-only coverage passes, family members can claim APTC on the Marketplace for their own coverage. The employee remains ineligible for APTC for their own coverage if self-only is affordable.
This change affected a significant number of families. Brokers with clients in two-income households where one employer offers affordable self-only but unaffordable family coverage should revisit eligibility for anyone enrolled before 2023 who was told they did not qualify.
What the broker does with a failed affordability test
When an employer plan fails either the affordability or minimum value test, the client becomes eligible for APTC. The broker then runs a Marketplace quote to compare the employer plan cost against the net Marketplace premium after APTC. The employer plan may still be the better choice in some cases: provider network access, mid-year deductible progress, or HSA-eligible plan features. The affordability test result opens the door. It does not dictate the recommendation.
Inshura does not surface affordability flags in their standard broker quoting flow. GetInsured AgentExpress routes affordability verification outside the tool, to a separate intake step. In QuoteTurbo, the income and household inputs drive subsidy eligibility display but the employer coverage question is the broker's intake job before the quote is run. Skipping it produces a subsidy estimate the client may not be eligible to receive.
For how APTC and CSR interact once eligibility is confirmed, read APTC vs CSR: what brokers must know.
Common mistakes at the employer coverage step
Using gross income instead of MAGI. The affordability test uses household MAGI, the same income figure the Marketplace uses for APTC. For most W-2 employees this is close to gross wages, but self-employed clients, clients with significant investment income, and clients with large above-the-line deductions will have different MAGI figures. Plugging in gross wages for a self-employed client with a $12,000 SEP IRA contribution produces an incorrect affordability threshold calculation.
Not asking about the spouse's employer. One spouse may have affordable employer coverage for self-only and the other spouse has no employer coverage. Under the household income rule, the affordability calculation uses household income, not each person's individual income. A broker who only asks the client about their own employer plan misses the spouse's plan access, which may block the client from Marketplace APTC.
Not revisiting clients who were told they did not qualify before 2023. The family glitch fix is retroactive to enrollment periods starting January 2023. Clients who were steered away from Marketplace enrollment before that change because of the old family affordability rule may qualify now if they are in an open enrollment or SEP window.
FAQ
Common questions brokers have about the ACA employer coverage affordability and minimum value tests.
What is the ACA affordability test for employer-sponsored coverage?
The ACA affordability test determines whether an employee's required contribution for the lowest-cost self-only plan option from their employer exceeds the IRS applicable percentage of household income for the plan year. The applicable percentage is adjusted annually by the IRS. When the employee's required contribution for self-only coverage is at or below that percentage of household income, the employer plan is considered affordable and the employee is not eligible for the Advance Premium Tax Credit on the Marketplace.
What is the minimum value test?
The minimum value test is separate from the affordability test. An employer plan meets minimum value if it is designed to pay at least 60 percent of the total allowed costs of benefits provided under the plan. A plan that fails the minimum value test does not block APTC eligibility, even if the employee's premium contribution would otherwise pass the affordability test. Both tests must be passed for employer coverage to block Marketplace subsidies.
What changed with the family glitch fix in 2023?
Before January 2023, the affordability test for all family members was based only on the cost of self-only coverage for the employee. This meant that even when family plan premiums were unaffordable, spouses and dependents could not claim APTC because the test looked only at the self-only premium. The IRS rule effective January 2023 changed this so that family member eligibility for APTC is evaluated based on the cost of family coverage, not self-only coverage. Families with unaffordable employer family plans can now qualify for Marketplace subsidies for family members.
Can an employee decline employer coverage and get ACA subsidies?
Declining employer coverage does not make an employee eligible for APTC if the employer plan is affordable and meets minimum value. The APTC eligibility test is based on whether affordable, minimum-value coverage is available through the employer, not whether the employee actually enrolled in it. An employee who declines affordable employer coverage and enrolls on the Marketplace is not eligible for APTC.
How does a broker identify employer coverage eligibility issues at intake?
Ask two questions during intake: does the client or their spouse have access to employer-sponsored coverage, and if so, what is the employee-only monthly premium? If the plan details are available, ask whether the plan covers at least 60 percent of expected costs. If the self-only premium is below the applicable percentage of household income and the plan meets minimum value, the client cannot claim APTC for themselves. If they have dependents and the family premium fails the affordability test, those family members may still qualify separately.
