Most people enrolled in employer-sponsored coverage, or with an offer of employer-sponsored coverage, will not be eligible for premium tax credits and would have to forgo a contribution from their employer toward their health care premiums in order to buy coverage in a health insurance marketplace.
To be eligible for premium tax credits, the employer-sponsored coverage must be “unaffordable” or fail to meet minimum value standards (i.e., considered “inadequate”). To be unaffordable, the cost of self-only coverage in the employer’s lowest cost plan must be more than 9.5 percent of the individual’s household income.
To fail to provide minimum value, the plan must have an actuarial value of less than 60 percent, meaning that the plan covers less than 60 percent of the total average costs for covered benefits. If the individual’s employer-sponsored coverage fails either test, the individual may be eligible for a premium tax credit for a plan purchased in a health insurance marketplace.