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What Employers Need to Know About the Rule Change
For Affordability of Employer Coverage for Family Members of
Employees For Purposes of Eligibility for the Premium Tax Credit
The rule that denes for purposes of eligibility for the premium tax credit (PTC) whether an oer of employer-
sponsored health coverage is aordable has changed. It is estimated that, as a result of this change about
1 million Americans will either gain coverage or see their insurance become more aordable, so it is
important that employers are aware of what the rule change is, and what it means for their employees
and dependents.
Background
Consumers who enroll in a Qualied Health Plan
(QHP) through the Marketplace may be eligible for
savings through PTC and/or cost sharing reductions
(CSRs). Under the Patient Protection and Aordable
Care Act (ACA), a consumer who has an oer of
employer-sponsored coverage does not qualify
for any of these nancial assistance options unless
the oer of coverage is considered unaordable or
fails to meet a “minimum value” standard. For 2023,
a plan is considered “unaordable” if the plan’s
premiums exceed 9.12 percent of the employee’s
household income. This percentage is referred to as
the Required Contribution Percentage (RCP).
What is changing?
The new rule on aordability of employer coverage for the family members of employees
changes how aordability is calculated for employees’ family members and increases the number of
consumers who have access to nancial assistance through the Marketplace. The New rule applies as
of January 1, 2023.
Until now, employer coverage has been considered aordable for all family members to whom an employer’s
oer extends if the premium for the employee’s self-only coverage was aordable. The premium required
to cover any family members was not taken into account. As a result, all members of the employee’s family
would be ineligible for nancial assistance through the Marketplace if the premium for the employee’s self-
only coverage was considered aordable.
Under the new aordability rule, if a consumer has an oer of employer coverage that extends to their
family members, the aordability of employer coverage for those family members will be based on the family
premium amount, not the self-only employee premium cost. As a result, members of the employee’s family
will be eligible for nancial assistance through the Marketplace if the premium for the employee’s family
coverage is considered unaordable.
Employers can notify
employees and their
families who have oers
of employer health
coverage that they may
have new opportunities
HealthCare.gov, even if
they were not eligible
before. Employers can use the
for employees to help them input the correct
information when they ll out a Marketplace
application. If employees have questions,
employers can direct them to HealthCare.gov or
1 (800) 318-2596 for further assistance.
If coverage is considered aordable for the employee but not the employee’s family members, there
are a variety of ways employees can obtain coverage for them and their family:
Split coverage (employer
and Marketplace):
Marketplace coverage only: Employer coverage only:
The employee could decline the
aordable employer coverage, and
the whole family could enroll in a
Marketplace plan. The family will pay
full price for the employee’s portion
of the Marketplace plan premium,
while other family members’ portions
would be lowered by using APTC
and/or CSRs if they are
otherwise eligible.
The whole family could enroll
in the employee’s oer of
employer-sponsored coverage.
While someone is enrolled in
employer coverage, they are not
eligible for the APTC or CSRs for
a Marketplace plan.
The employee could enroll in the
aordable employer coverage,
while their family members enroll
in a Marketplace plan with APTC/
CSRs (if otherwise eligible).
Employees may be eligible for a 60-day Special Enrollment Period (SEP) if their oer of employer-
!
sponsored coverage changes outside of Open Enrollment. In this situation, employers can
recommend that their employees review their options.
Eligibility for Financial Assistance in the Marketplace
Scenario Employee Employee’s Dependents Summary
Self-only premium
is less than 9.12% of
the family income
Family premium
is less than 9.12% of
the family income
Self-only premium
is less than 9.12% of
the family income
Family premium
is more than 9.12%
of the family income
Self-only premium
is more than 9.12%
of the family income
Family premium
is more than 9.12%
of the family income
Employee and family
members are not eligible
for financial assistance in
the Marketplace
Employee is not eligible
for financial assistance
Family members are
newly eligible for financial
assistance (if otherwise
eligible)
Employee and family
members are eligible for
financial assistance (if
otherwise eligible)
Employer shared responsibility payments
This rule change does not impact the employer shared responsibility payment. Applicable large employers
(ALEs) generally must oer coverage to full-time employees and their dependents, or they could potentially be
subject to an employer shared responsibility payment if at least one full-time employee is allowed a premium
tax credit. Although failure to oer coverage to full-time employees and their dependents may result in an
employer shared responsibility payment, only the coverage oered to the full-time employee is required to
be aordable. As the new rule does not change how aordability for an employee is determined, there is no
change to the rules for determining ALEs’ liability for the employer shared responsibility payments.
