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Employer coverage

Employer coverage affordability and the 2026 premium tax credit

Apply the 2026 required contribution percentage to the lowest-cost qualifying employer offer for the employee.

Ruling
For plan years beginning in 2026, the employee affordability percentage is 9.96% of household income. An affordable employer offer that provides minimum value generally blocks the employee's PTC for the offered months.

Use the correct employee premium

Test the employee's required contribution for the lowest-cost self-only plan that provides minimum value, not the employee's chosen richer plan. Compare the annualized amount with the indexed household-income percentage for the employer plan year.

An offer can matter without enrollment

Eligibility for affordable minimum-value coverage generally blocks the credit even when the employee declines the offer and enrolls through the Marketplace. Losing the offer or a material cost change should be reported promptly.

Decision example and mistake

An employee rejects an affordable base plan and compares the Marketplace only with a costly employer premium plan. The base offer may still block the credit. The mistake is testing the price of the plan the employee prefers instead of the lowest-cost minimum-value option.

Document the lowest-cost qualifying offer

Obtain the employer coverage tool, offer notice, or benefit materials showing the employee contribution for the lowest-cost self-only plan that provides minimum value. Use the 2026 affordability percentage for the employer plan year and the applicable household-income measure. The premium for a richer plan the employee selected does not replace the base-offer test.

Keep the employer plan-year dates because a calendar-year Marketplace policy can overlap two employer affordability percentages or contribution schedules.

Filing and enrollment checks

  • Annualize the required employee contribution for the offer period.
  • Confirm minimum value separately from affordability.
  • Record offer start, termination, and waiting-period dates by month.

Continue with

Employer affordability for a spouse and dependentsMinimum value: the employer-plan test behind PTC eligibilityReporting a new job offer, Medicare, Medicaid, or other coverage

Authorities used for this guide