What was the “family glitch”?
When the Affordable Care Act was first implemented, eligibility for Marketplace premium tax credits was tied largely to whether an employee had access to affordable job-based coverage. The affordability calculation looked at the employee’s cost for self-only coverage—even when adding a spouse or children made the employer plan far more expensive.
As a result, an employee’s offer could be considered affordable while the cost of covering the rest of the family was not. Those family members were often prevented from receiving Marketplace subsidies. That became known as the family glitch.
What did the Family Glitch Fix change?
Beginning with 2023 Marketplace coverage, affordability for family members is evaluated using the cost of employer coverage for the household—not only the employee’s self-only premium. This separate test can allow a spouse or dependent children to qualify for Marketplace premium tax credits when the family portion of the employer plan is considered unaffordable.
The employee’s eligibility is generally tested using the cost of self-only job-based coverage. The spouse and dependents are tested using the cost of covering the family members offered coverage.
How does the 2026 affordability test work?
For 2026, job-based coverage is considered affordable when the applicable employee contribution for the lowest-cost plan that meets minimum-value standards is less than 9.96% of household income.
If self-only coverage is affordable for the employee, the employee generally will not qualify for Marketplace premium tax credits. But if the cost to cover the offered family members is not affordable under the family test, the spouse and dependents may qualify for savings.
An employee can buy qualifying self-only coverage for $250 per month, but the lowest-cost option covering the employee, spouse and children is $1,100 per month. Depending on household income and other eligibility factors, the employee may remain on the employer plan while the spouse and children qualify for subsidized Marketplace coverage.
This example is educational and is not an eligibility determination.What coverage would the family members receive?
Eligible family members can enroll in an individual ACA Marketplace plan offered by an approved insurance carrier. Marketplace plans:
- Cover the ACA’s essential health benefits.
- Cannot deny enrollment or charge more because of pre-existing conditions.
- Include annual limits on in-network out-of-pocket spending for covered essential health benefits.
- Cannot impose annual or lifetime dollar limits on essential health benefits.
Premiums, provider networks, deductibles, formularies and plan availability vary by location. A Marketplace plan is individual coverage, not the employee’s group health plan.
Who should take a closer look?
The Family Glitch Fix may be worth reviewing when:
- The employee’s own job-based coverage is reasonably priced, but adding a spouse or children is expensive.
- Some dependents are uninsured because the employer’s family premium is out of reach.
- A family is paying a large share of household income for dependent coverage.
- The employer offers coverage to dependents but contributes little toward their premiums.
Eligibility also depends on household income, tax-filing status, immigration status, access to other coverage and additional Marketplace rules. An application is the only way to receive an official eligibility determination.
Can the employee stay on the employer plan?
Yes. In many Family Glitch Fix situations, the employee remains enrolled in the employer plan while eligible family members enroll in a Marketplace plan. Families should compare total premiums, deductibles, provider networks and prescription coverage before splitting coverage.
When can someone enroll?
Enrollment is generally available during the annual Marketplace Open Enrollment Period. Certain life events or changes in eligibility may provide a Special Enrollment Period. Voluntarily dropping job-based coverage does not automatically create a Special Enrollment Period, so confirm timing before canceling existing coverage.
The simplest next step
Gather the employer’s lowest-cost premiums for employee-only and family coverage, along with an estimate of total household income. A short review can help determine whether a Marketplace application is worth pursuing and how the available plans compare with the employer option.