The question of whether an individual can obtain health insurance through the Health Insurance Marketplace when an employer offers coverage has a nuanced answer. While anyone may apply for coverage, the ability to receive financial assistance is severely restricted by the presence of employer-sponsored insurance. The primary reason people seek the Marketplace is to access premium tax credits (subsidies that lower the monthly cost of coverage). Eligibility for these subsidies is the central issue, determined by federal rules regarding the employer’s offer.
The Core Restriction: Subsidies and Employer Coverage
The default rule generally prevents individuals from accessing premium tax credits (PTCs) if they have an offer of employer-sponsored insurance (ESI). This restriction exists because the Marketplace subsidies are intended to provide an affordable coverage option only to those who lack access to other suitable sources. If an employer offers what is deemed “Minimum Essential Coverage” (MEC), the employee is typically blocked from receiving federal subsidies through the Exchange.
MEC is a broad term defining the type of major medical coverage required to satisfy health coverage requirements. Most traditional employer-provided health plans meet this MEC standard. The determining factor is not whether the employee enrolls in the employer’s plan, but simply whether the employer offers it.
The employee does not have to accept the ESI, but the mere offer of MEC usually cancels eligibility for Marketplace financial assistance. This means a person can still purchase a plan on the Marketplace, but they will not benefit from the income-based tax credits designed to lower monthly premiums. This default rule is only overridden if the employer’s coverage fails two specific federal tests related to cost and coverage level.
Determining Qualification: The Affordability and Minimum Value Tests
An individual only becomes eligible for Marketplace subsidies if the employer’s offer of coverage fails either the Affordability Test or the Minimum Value Test. These two standards determine if the ESI is considered qualified coverage. The Affordability Test focuses on the employee’s financial contribution to the premium for self-only coverage.
For a plan year, the cost of the lowest-priced, self-only coverage offered by the employer cannot exceed a specific percentage of the employee’s household income to be considered affordable. For instance, for 2025, the employee’s share of the premium for self-only coverage must be less than 9.02% of their household income. If the required contribution exceeds this threshold, the plan is considered unaffordable, and the employee may qualify for Marketplace subsidies.
The affordability calculation is initially based only on the premium for the employee’s individual coverage. The “Family Glitch Fix” updated guidance so that affordability is now determined separately for the employee and for family members. If the employee’s self-only coverage is affordable, the employee remains ineligible for Marketplace subsidies.
However, if the cost for the family to enroll in the employer plan is considered unaffordable based on household income, the employee’s spouse and dependents may qualify for premium tax credits in the Marketplace. This allows family members to access subsidized coverage even if the employee remains locked out due to the affordable self-only coverage offer.
The second standard is the Minimum Value Test, which evaluates the generosity of the employer’s plan benefits. A health plan meets the minimum value standard if it is designed to cover at least 60% of the total allowed costs of benefits for a standard population. In addition to the 60% threshold, the plan must also provide substantial coverage for both physician services and inpatient hospital services. A plan that fails the Minimum Value Test is considered insufficient, making the employee and their family eligible for Marketplace subsidies.
Practical Steps: Applying for Coverage and Checking Eligibility
The first practical step in determining subsidy eligibility is to gather specific information about the employer’s health coverage offer. The Marketplace provides the Employer Coverage Tool, which the employee can use to collect necessary details from their employer or Human Resources department. This tool asks for the employer’s name, whether the plan meets minimum value, and the cost of the lowest-priced self-only plan.
This information is entered into the Marketplace application, which automatically runs the Affordability and Minimum Value Tests. The Marketplace system then delivers an eligibility notice stating whether the applicant and their family members qualify for premium tax credits. There is no risk in completing the application, as the process only determines eligibility and does not automatically enroll the applicant in a plan.
If the applicant is found eligible for subsidies, they must understand that accepting the tax credits requires them to forgo the employer-sponsored coverage. If the applicant mistakenly receives subsidies while having access to a qualified employer plan, they will likely have to repay the entire amount of the premium tax credit when filing federal income taxes.
Enrollment in a Marketplace plan generally occurs during the annual Open Enrollment Period (typically November 1st to January 15th). Outside of this period, a change in job status or loss of employer coverage may qualify an individual for a Special Enrollment Period (SEP). The ultimate decision involves comparing the total out-of-pocket costs of the Marketplace plan, including the subsidized premium, against the cost and benefits of the employer’s plan.