Employer Plan vs Marketplace Calculator
The employer offer, and the Marketplace plan
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Educational estimate only. Confirm the assumptions, current rules, fees, and rounding that apply to your situation before making a decision.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter your household income for the year and the number of people in your tax household. The affordability test is a percentage of household income, not of your salary, so a spouse's earnings change the answer.
- 02
Enter the employee-only premium your employer charges you a month, then the family premium. Use the amount deducted from your pay rather than the full cost of the plan: the test looks at your share. These two figures are tested separately and can give different answers.
- 03
Add the employer plan's deductible and out-of-pocket maximum, then the Marketplace side: the benchmark Silver premium your Marketplace quotes for your household, the premium of the plan you would actually buy, and its deductible and out-of-pocket maximum.
- 04
Enter the medical bills you expect for the year. This drives the cost comparison but not the affordability test, which depends only on premium and income.
- 05
Read the verdict first and the cost second. If the offer is affordable, the credit is off the table however good the Marketplace plan looks, so the affordability percentage is the number that decides the shape of your choice.
Formula
Affordability for the employee = employee-only premium × 12 ÷ household income × 100, compared with the required contribution percentage for the plan year, 9.96% for 2026 and 10.22% for 2027. Affordability for a related individual uses the same comparison but with the family premium × 12 on top. If the employee test passes, the premium tax credit is blocked for the whole household; if it fails, the credit is the benchmark Silver premium × 12 less the household's expected contribution, which is income times the applicable percentage from the IRS table, and zero above 400% of the poverty line. Total yearly cost on either route = premium × 12 (less any credit on the Marketplace side) + the member's share of care, which is everything up to the deductible, then the coinsurance share, capped at the out-of-pocket maximum. The income where the offer turns affordable = the yearly employee premium ÷ the required contribution percentage.
Example
A household of 3 earns $72,000 for plan year 2026. The employer charges $145 a month for employee-only coverage, which is $1,740 a year, or 2.42% of household income against a 9.96% threshold, so the offer is affordable and the premium tax credit is blocked. The benchmark Silver premium of $780 a month would otherwise have generated $2,842 a year of credit. The family premium of $620 a month is a separate test and comes to 10.33% of income, above the threshold, so the spouse and children remain eligible for a credit even though the employee is not. At $6,000 of expected care the employer plan costs $4,940 for the year, against $14,720 for a $760 Marketplace plan with no credit, so the employer route is $9,780 cheaper. The offer would turn unaffordable only below a household income of $17,470. Raising the employee premium to $700 a month flips the verdict: 11.67% of income, a credit of $2,842, and the two routes within $278 of each other.
Definitions
- Required contribution percentage
- The share of household income an employee-only premium may reach before an employer plan stops counting as affordable. Set each year by the IRS: 9.96% for plan year 2026 and 10.22% for 2027.
- Affordable offer
- An employer plan whose employee-only premium is at or below the required contribution percentage of household income. An affordable offer that also meets minimum value blocks the premium tax credit for the whole tax household.
- Minimum value
- A standard an employer plan must meet to block the credit: paying at least 60% of the cost of covered benefits and covering substantial inpatient and physician services.
- Benchmark Silver plan
- The second-lowest-cost Silver plan available to your household on the Marketplace. Its premium sets the size of the premium tax credit, whichever plan you actually buy.
- Related individual
- Someone who can enrol in an employer plan because of their relationship to the employee, such as a spouse or child. Since 2023 their affordability is tested on the family premium, separately from the employee's.
Good to know
The affordability test, in the words of the regulation
The rule that decides whether you may claim a premium tax credit while your employer offers you coverage is narrower than most people assume, and reading it precisely saves a lot of argument. It is at 26 CFR 1.36B-2(c)(3)(v)(A)(1), and it says an employer plan is affordable for an employee if the portion of the annual premium the employee must pay for self-only coverage does not exceed the required contribution percentage of household income. Four details in that sentence do the work. First, self-only coverage: the test looks at what you would pay to cover yourself alone, even if you are actually enrolling a family. Second, the portion the employee must pay: not the full cost of the plan, only your share, the amount deducted from your pay. Third, household income, not your salary. A spouse's earnings raise the denominator and make the offer more likely to pass. Fourth, the required contribution percentage, which the IRS resets each year and which is 9.96% for plan year 2026 and 10.22% for 2027. On this page's example a $145 monthly premium is $1,740 a year, and against $72,000 of household income that is 2.42%, well inside the threshold, so the offer is affordable. Because the test is a ratio of a fixed premium to income, it becomes easier to pass as income rises. The page solves for the point directly: at $145 a month the offer turns affordable at a household income of $17,470, so almost any household with that premium will find it affordable. Raise the premium to $700 a month and the line moves to $84,337, which puts a household earning $72,000 comfortably below it, at 11.67% of income, and the offer fails. That is the entire mechanism, and it is worth knowing that the Marketplace can also make its own affordability determination when you enrol, which under (c)(3)(v)(A)(3) protects you even if the figures later turn out differently.
The family glitch, and the fix that arrived in 2023
For the first decade of the Affordable Care Act, the affordability test was applied only to the employee-only premium, and that single figure decided eligibility for the whole family. The result became known as the family glitch. An employer might charge an employee $145 a month to cover themselves, which is plainly affordable, but $620 a month to cover the family, which is not. Because only the first number was tested, the entire household was treated as having an affordable offer and nobody could claim a premium tax credit. Families were pushed into paying a family premium that consumed a large share of income, or into going uninsured, with no help available. The fix came in a regulation effective from 2023 and it now sits at 26 CFR 1.36B-2(c)(3)(v)(A)(2). It provides that an employer plan is affordable for a related individual, meaning a spouse or child who can enrol because of their relationship to the employee, only if the employee's required contribution for family coverage does not exceed the required contribution percentage of household income. The two tests are now genuinely separate, and they can give different answers for the same plan. This page's example is precisely the case the fix was written for. The employee-only premium passes at 2.42% of income. The family premium of $620 a month is $7,440 a year, which is 10.33% of the same $72,000 income, above the 9.96% threshold. So the employee has an affordable offer and cannot claim a credit, while the spouse and children have an unaffordable offer and may buy on the Marketplace with one. Split coverage of that kind is inconvenient, because the family ends up on two plans with two deductibles and possibly two networks, but it can be substantially cheaper. The regulation's own Example 2 at (c)(3)(v)(D)(2) walks through the same situation. One further detail: the cost of covering someone who is not in your tax family, such as an adult child you do not claim as a dependent, is left out of the family premium for this test.
Minimum value, the half of the test people forget
Affordability is necessary to block the premium tax credit, but it is not sufficient. An employer plan only blocks the credit if it also provides minimum value. The standard is that the plan pays at least 60% of the total allowed cost of benefits, and that it provides substantial coverage of inpatient hospital services and physician services. That second half was added to close a loophole: some employers had offered so-called skinny plans that met the 60% arithmetic on paper while covering no hospital care at all, which left employees nominally insured and practically exposed, and blocked them from the Marketplace into the bargain. The reason it matters to this page is that the two conditions are independent. A plan can be very cheap, and therefore easily affordable, and still fail minimum value, in which case it cannot block the credit whatever its premium. If you are offered coverage that looks unusually inexpensive, it is worth checking before assuming the Marketplace is closed to you. The place to look is the summary of benefits and coverage, a standardised document your employer must provide, which states whether the plan meets the minimum value standard. Your human resources department can confirm it in writing, and that confirmation is worth having if you intend to claim a credit. This page assumes the employer plan does provide minimum value, because the great majority of real employer plans do, and it says so in an insight rather than hiding the assumption. If yours does not, the affordability verdict on the page can be ignored: the credit is available to you regardless of how small the premium is. There is one more asymmetry worth knowing. Eligibility for an employer plan blocks the credit whether or not you actually enrol, so declining coverage does not restore it. The exception is where the plan fails one of these two tests, which is why establishing that failure clearly, and keeping the evidence, is the step that matters.
Comparing two routes when only one can carry a credit
Once the eligibility question is settled the comparison becomes ordinary arithmetic, but it is arithmetic on two very different cost structures, and the affordability verdict changes the shape of it completely. When the employer offer is affordable the credit is worth nothing to you, so the Marketplace plan must be compared at its full sticker price. In this page's example that is decisive: at $6,000 of expected care the employer plan costs $4,940 for the year, made up of $1,740 of premium and $3,200 of cost-sharing, while the Marketplace plan costs $14,720 with no credit at all. The employer route wins by $9,780, and it wins at every level of care in the table, from $1,740 against $9,120 with no medical bills at all, to $8,740 against $18,320 at $40,000 of care. That is the normal result when an employer pays most of the premium, and it is why an affordable offer usually settles the matter. When the offer is unaffordable the comparison becomes genuinely close, because the credit does most of the work. Running the same example with a $700 monthly employee premium makes the offer fail at 11.67%, which opens a credit of $2,842 a year, or $237 a month. The employer plan then costs $11,600 for the year against $11,878 on the Marketplace, a difference of only $278, and the ranking actually changes with the level of care: at no medical bills the Marketplace plan is ahead by more than $2,000, while from around $6,000 of care the employer plan edges in front because its deductible is lower. With margins that narrow, the non-financial factors deserve real weight. Check whether your doctors are in each network, how prescriptions are covered, and whether a family would be split across two plans and two deductibles. One structural advantage does not appear in these figures: employer premiums are usually deducted from pay before tax under a section 125 arrangement, while Marketplace premiums are paid with money already taxed, so at equal headline cost the employer route is cheaper after tax. Your plan documents and the Marketplace decide the real numbers.
Frequently asked questions
Is my employer's health insurance affordable under the rules?
It is affordable if the employee-only premium is at or below the required contribution percentage of household income, which is 9.96% for plan year 2026. On this page's example, $145 a month is $1,740 a year against $72,000 of household income, or 2.42%, comfortably inside the threshold. That makes the offer affordable, and an affordable offer blocks the premium tax credit.
Can I get a Marketplace subsidy if my employer offers insurance?
Only if the offer fails the affordability test or fails minimum value. In the example the offer passes at 2.42%, so the $2,842 a year the benchmark plan would otherwise generate is not available to anyone in the household. Buying on the Marketplace is still allowed; you would simply pay the full price, which is why the Marketplace column comes to $14,720 against $4,940 on the employer plan.
What is the family glitch, and was it really fixed?
It was fixed from 2023, and the fix is in the regulation rather than in a press release. Under 26 CFR 1.36B-2(c)(3)(v)(A)(1) the employee's self-only premium is tested, and under (A)(2) the premium for family coverage is tested separately against the same percentage. The example shows exactly the case it was written for: the employee-only premium passes at 2.42%, but the family premium of $620 a month is 10.33% of income, above 9.96%, so the spouse and children may claim a credit even though the employee cannot.
At what income does my employer's plan become affordable?
At the income where your yearly premium stops being more than the threshold percentage of it. The page solves it directly: at $145 a month the offer turns affordable at a household income of $17,470. Raise the premium to $700 a month and that line moves to $84,337, so a household earning $72,000 would be below it and the credit would stay open.
Which one actually costs less for the year?
In the example the employer plan, by a wide margin. At $6,000 of expected care it comes to $4,940 for the year against $14,720 on the Marketplace plan, a difference of $9,780, because the employer is paying most of the premium and no credit is available to close the gap. Where the offer is unaffordable the two get much closer: at a $700 monthly premium the employer plan costs $11,600 and the Marketplace plan $11,878 after a $2,842 credit.
What is minimum value, and why does it matter?
It is the second half of the test. An employer plan only blocks the credit if it also provides minimum value, meaning it pays at least 60% of the cost of covered benefits and covers substantial inpatient and physician services. A plan can be cheap enough to be affordable and still fail minimum value, in which case it cannot block the credit whatever the premium. Your summary of benefits and coverage is where that is stated.
Should I take the employer plan just because it is affordable?
Affordability is a tax test, not a quality judgement. It decides whether the credit is available to you, not whether the plan is good. Once you know the credit is blocked, the real comparison is the one at the bottom of the page: total cost for the year at the care you expect, on both plans, with their deductibles and out-of-pocket maximums. Your plan documents and the Marketplace decide the real numbers.