For many with access to group coverage, the Affordable Care Act will offer little assistance. If you currently have group coverage, either through your employer or your spouse’s employer, you will need to determine what the employee only cost is to be on the coverage. Once you have this figure, you need to compare that number to the household’s income. If the employee’s portion of the health insurance premium is less than 9.5% of your gross income, the law deems it affordable; no matter what it costs to add the dependents or spouse. If your employer coverage is deemed affordable, this will disqualify you for any subsidy.
Example: Bob has group coverage but does not cover the family (wife and 3 kids) due to the cost of adding them to his group plan. Bob makes $40,000 a year and his wife does not work. If Bob’s portion (what is taken out of his check for his insurance) is $25/week; Bob’s premium may be deemed affordable. Let’s do the math. Bob’s $25/week equals $1,300 per year. If we divide 1,300/40,000; we get 0.0325, which is 3.25% of his income. Bob’s coverage is deemed affordable, no matter what it costs to add his wife and kids. Neither Bob, nor his family members, would be eligible for a subsidy. At this point, it’s a decision between adding the family to his group coverage or considering buying coverage “off the exchange.” This situation has been referred to as the “family glitch.”
This is a reference from healthcare.gov website:
“Affordable” plans and the 9.5% standard
A job-based health plan is considered “affordable” if the employee’s share of premiums for the lowest cost self-only coverage that meets the minimum value standard is less than 9.5% of their family’s income.
In other words, if your share of your premiums for a plan that covers only you (the employee)–not your family–is less than 9.5% of your family’s income, the plan is considered affordable.
You may pay more than 9.5% of your income on premiums for spouse or family coverage from your employer. But affordability is determined only by the amount you’d pay for self-only coverage from your employer.
The next step would be to compare coverage available “off the exchange” to what you have through work. If there are better options available to you“off the exchange”, you can purchase coverage there with no subsidy.