For years, families were stuck in a trap. If an employer offered affordable coverage to the worker alone, the whole family was treated as having affordable coverage — even when adding a spouse and children cost a fortune. That meant no marketplace subsidies for anyone. It was nicknamed the family glitch, and it has been fixed.
What the fix changed
A federal rule that took effect with 2023 coverage changed how affordability is measured for family members. Now, whether your spouse and dependents can get marketplace subsidies depends on the cost of family coverage through your job — not the cost of covering you alone.
How affordability is tested now
- For the employee: affordability is still based on the cost of employee-only coverage.
- For family members: affordability is based on what it costs the employee to cover the whole family.
If the family premium exceeds the IRS affordability percentage of household income — roughly one-tenth of income, with the exact figure set each year — your family members may qualify for premium tax credits on the marketplace, even though you stay on your employer plan.
A common setup that saves money
Many families end up splitting coverage:
- The employee stays on the employer plan (employee-only premium).
- The spouse and children enroll in a subsidized marketplace plan.
Depending on income and the employer's pricing, this can cost far less than putting everyone on the employer's family tier.
Things to weigh before splitting
- Two deductibles: separate plans mean separate deductibles and out-of-pocket limits.
- Two networks: family members may see different doctors than the employee.
- Children's dental and vision: confirm how pediatric coverage is handled — see children's dental under the ACA.
- Employer contribution: the employer's share of family premiums generally does not follow you to the marketplace.
How to check if you qualify
- Get the exact monthly cost of employee-plus-family coverage from your employer.
- Estimate your household income — see how to estimate marketplace income.
- Answer the employer coverage questions on the marketplace application carefully; they determine eligibility.
- Compare total cost — premiums plus expected out-of-pocket — across both options.
Timing
You can make this switch during Open Enrollment. Coordinate it with your employer's own enrollment window so the employee's election and the family's marketplace plan line up on January 1.
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