The premium tax credit is a tax credit that offsets your annual health insurance premiums. It’s a way for the government to pay for some or all of your private health insurance costs.
American families with incomes that qualify them for premium tax credits cannot access them if their employers offer them affordable coverage. Your employer coverage is affordable in 2025 as long as you’re not required to pay more than 9.02 percent of your household income.
Prior to 2023, this affordability calculation was unfair to households of two or more because it did not consider affordability for the entire family. It only considered affordability for the employee! However, thanks to a regulatory update in October 2022, the family glitch has been corrected starting in 2023.
Going forward, instead of basing affordability of employer-provided health insurance on just the cost to cover the employee, the affordability will now be made based on the cost to cover the entire family. As a result, many families who are currently covered by employer coverage may now consider a hybrid approach in which the employed family member retains employer coverage and the rest of the family purchase a separate Marketplace plan to take advantage of the premium tax credit.
