How the ACA Employer Affordability Test Works
Under the Affordable Care Act, if your employer offers health insurance, the IRS applies an "affordability test" to determine whether you're eligible for marketplace subsidies. For 2026, employer coverage is considered affordable if your share of the self-only premium costs no more than 9.83% of your household income.
The 2026 affordability threshold: 9.83%
The IRS updates the affordability percentage each year. For 2026, the threshold is 9.83% of household income. Here's what that means at different income levels:
| Annual income | Monthly income | 9.83% threshold/month | Annual threshold |
|---|---|---|---|
| $30,000 | $2,500 | $246/mo | $2,949/yr |
| $40,000 | $3,333 | $328/mo | $3,932/yr |
| $50,000 | $4,167 | $410/mo | $4,915/yr |
| $60,000 | $5,000 | $492/mo | $5,898/yr |
| $75,000 | $6,250 | $614/mo | $7,373/yr |
| $100,000 | $8,333 | $819/mo | $9,830/yr |
What if my employer plan isn't affordable?
If your employer coverage costs more than 9.83% of your household income, you may be eligible for premium tax credits on the ACA marketplace. Consult a licensed health insurance agent or visit Healthcare.gov to understand your options before making any coverage decisions.
Important: self-only coverage only
The affordability test is based only on the cost of self-only coverage — not family coverage. Even if adding your family to the employer plan would be very expensive, the affordability test only considers what you pay for yourself. This means family members may qualify for marketplace subsidies even if the employee does not.