Affordability 9.5% of employee ONLY share of premium – NOT family

Can you get Covered CA Subsidies if your Employer offers “Affordable Health Coverage?”

If you are offered affordable health coverage (FREE Quotes) and has “minimum value”  under an employer plan, that is less than 9.86% of income for employee ONLY  (CFR 1.36 B 2 * ThomsonReuters  * Revenue Procedure 2018-34Revenue Procedure 2014-62) neither you or your family qualifies for the APTC Advance Premium Tax Credit-subsidy from Covered CA, Health Care.Gov or any exchange. Covered CA FAQ  

It doesn’t matter if the family coverage would go over the 9.86% limit.  That just the way the law and rulings work.  See below for details and explanations.  Note that if rates increase or employer contribution lowers, that may trigger a special enrollment period, rather than wait for open enrollment.  See also the 8% rule if you want an exemption from the individual mandate or permission to get a catastrophic – minimum coverage plan.

Cal Choice Premium Affordability Calculator

New rule about HRA’s – Employer Heatlh Reimbursement Accounts. Section 106 Deduction for employer provided coverage?

What about adult children under 26?

Adult child up to age 26 are eligible for Coverage through their parents employers plan.  However if they are  paying their own taxes, they are not anyone’s tax  dependent, they do not count towards  household income, – MAGI.   Then the adult children could qualify for their own coverage in Covered CA.

Learn More⇒  Kaiser Health News 11.8.2013

Citations & Details

Example 2. Basic determination of affordability for a related individual. The facts are the same as in Example 1, except that C is married to J and X’s plan requires C to contribute $5,300 for coverage for C and J for 2014 (11.3 percent of C’s household income). Because C’s required contribution for self-only coverage ($3,450) does not exceed 9.5 percent of household income, under paragraph (c)(3)(v)(A)( 2 ) of this section, X’s plan is affordable for C and J, and C and J are eligible for minimum essential coverage for all months in 2014 CFR §1.36 B 2 Eligibility for Premium Tax Credit

However, the cost of a family plan is often higher, but the ruling means that those higher costs will not be considered even if the extra premiums push the cost of coverage above the 9.5% income threshold. The New York Times said this could leave 2–4 million Americans unable to afford family coverage under their employers’ plans and ineligible for subsidies to buy coverage elsewhere.[136][137]  Wikipedia

Alternatives – Solutions?

One possible solution to the Family Issue would be to have the Employer get a program thru the SHOP exchange, exclude dependents, then they are NOT eligible and can then select “None of the Above” and get subsidies based on household income.

Insure Me Explanation 9.29.2015

Self Employed Health Care Deduction?


Covered CA Questions on Employer Provided Coverage – Concerning 9.5% rule
Questions About 8% Rule and possible Exemption from Mandated Health Insurance

More Explanation

Under the law, those workers whose employers offer “affordable coverage” will not be eligible for subsidies in the exchanges. To be eligible, per the law’s definition, the cost of employer-based health insurance must exceed 9.5% of the worker’s household income. In January 2013 the Internal Revenue Service (CFR 1.36 B 2) ruled that only the cost of covering the individual employee would be considered in determining whether the cost of coverage exceeded 9.5% of income.

Metal Levels – Bronze 60% Actuarial Value –

Minimum Value Definition ==>An employer-sponsored plan provides minimum value if it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan. See Notice 2014-69 for additional guidance regarding whether an employer-sponsored plan provides minimum value coverage if the plan fails to substantially cover in-patient hospitalization services or physician services  *  Covered CA Bulletin page 2  * Our Ben E Lect Webpage  * Employer is mandated to tell you 1095 C  *  IRS  Notice 2012-31

1095 C - Offer of Coverage
1095 C – Offer of Coverage
9.86% Applicable Percentage 2019
9.86% Applicable Percentage 2019  Rev Proc  2018-34

Related Pages in the subsidy and tax credit section and FAQ’s

IRS FAQ’s on Shared Responsibility – Mandate – Penalties

9.5% calculation tool – Excel from

8% Affordability Rule – Exemption Form #8965?

5000A (e) (1) (A)


affordable 9.5%
9.5% Affordability – This screen shot appears to be out of date – We are double checking

2 comments on “Affordable Health Coverage? 9.86% Employee ONLY

    • See the information above on “minimum value.”

      The American Worker website at states that MEC is not minimum value, thus one would still be eligible for Covered CA subsidies.

      MEC [Minimum Essential Coverage] plans help employers meet one of the Employer Mandate penalties. By offering this level of qualifying coverage, employers will meet the requirement of offering “qualifying” coverage but not the requirement of “affordable” coverage. Employers must offer a Minimum Value Plan that meets the 60% Actuarial Value rule [Bronze] and affordability rules in order to avoid a $3,390 tax penalty for each employee who enrolls in a plan from the Exchange and receives a tax subsidy.

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