Find a plan.
I have family coverage through my employer but have to pay the full cost of my kids’ premiums. Can I buy individual policies for my children instead?

The 'family glitch' has put health insurance coverage out of reach for between two and six million people.

The 'family glitch' has put health insurance coverage out of reach for between two and six million people.

I have family coverage through my employer but have to pay the full cost of my kids’ premiums. Can I buy individual policies for my children instead?

Q. My company offers health insurance coverage for the whole family, and fully covers the portion of the premium to cover me. But they don’t pay any of the premium to add dependents to the plan; if I want to add my kids, I have to pay the full cost of their premium. Can I buy individual policies for my children instead? Will they qualify for subsidies?

A. The ACA’s employer mandate requires businesses with 50 or more full time-equivalent employees to offer health insurance to their full-time employees and those employees’ children. But while the coverage must be considered affordable for the employees, there is no requirement that the employer funds any portion of the premiums for dependents (the average employer funds the majority of premiums even for family coverage, but they’re not required to do so and smaller businesses are less likely to cover the cost to add dependents to the plan).

In order to be in compliance with the employer mandate, the coverage that employers offer to their full-time employees for employee-only coverage can’t cost an employee more than 9.83% of the employee’s household income in 2021. Most large employers use a “safe harbor” calculation of no more than 9.83% of the employee’s wages or the federal poverty level, since employers don’t generally have access to household income data for their workers.

The family glitch

But there is no limit on the percentage of income that an employee has to pay to cover the whole family. If the coverage is deemed affordable for the employee (ie, no more than 9.83% of household income in 2021), that employee cannot get subsidies in the exchange instead of taking the employer-sponsored insurance. And as long as the employee’s dependents have access to the employer-sponsored plan, their coverage is also considered “affordable,” regardless of how much extra it costs to add them to the employer-sponsored plan. Since their coverage is considered affordable, they’re not eligible for premium subsidies (premium tax credits) in the exchange/marketplace.

Small employers (fewer than 50 full-time equivalent employees) are not required to offer coverage at all under the ACA, but if they do offer coverage and it’s considered affordable for the employee, the dependents who are eligible for coverage under the employer plan are not eligible for subsidies, regardless of how much their coverage costs through the employer-sponsored plan.

This situation is known as the family glitch, and it has put health insurance coverage out of reach for between two and six million people. Essentially, they may have no realistically affordable options, despite the fact that the employer-sponsored plan available to them is technically considered affordable. In addition to the income-based eligibility rules, premium subsidies in the exchange are only available to people who either:

  • don’t have access to an employer-sponsored plan at all
  • have access to an employer plan that doesn’t provide minimum value (cover at least 60% of average costs and include coverage for inpatient and physician services), or costs more than 9.83% of household income in 2021 for employee-only coverage, without regard for how much it costs to cover the whole family.

The good news for some families in this predicament is that Medicaid and Children’s Health Insurance Program (CHIP) eligibility thresholds are quite generous in some states. If your kids are eligible for Medicaid or CHIP, you may be able to enroll them even if they have access to coverage from your employer (eligibility guidelines vary by state).

And in answer to your question, yes, you can buy an individual plan for your kids, either through the exchange or off-exchange. But since your coverage is free for you, assuming it also provides minimum value, your kids would not be eligible for exchange subsidies, regardless of how much it costs to add them to your employer-sponsored plan. That would mean that you’d have to pay full price for an individual market plan for your kids. Depending on the coverage you need and the cost of the employer-sponsored plan, that may or may not end up being a good value.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

Related articles

You cannot qualify for a health insurance premium subsidy unless the insurance your employer offers would force you to kick in more than 9.83% of your income to cover your ...
If your employer-sponsored insurance becomes unaffordable OR the coverage is reduced such that it no longer provides minimum value, and if you are otherwise eligible for subsidies in the exchange ...
There are somewhere between 2 and 4 million people who are impacted by the "family glitch" who are basically missing out on access to affordable health insurance now.
A. You're correct that your household income on its own would make your family eligible for a subsidy if you didn't have access to any other coverage. However, subsidy eligibility ...
0 0 votes
Article Rating
Notify of
Newest Most Voted
Inline Feedbacks
View all comments
Danny v
Danny v
1 year ago

My employer is getting notice that if I don’t put my daughter on there insurance I will need a court order. My child already has Medicaid can they force me to take my employees health insurance that is to expensive please help I might lose my job over this

Louise Norris
1 year ago
Reply to  Danny v

Who is sending the employer that notice? Is it the state Medicaid department? There are some states where Medicaid funds are used to enroll eligible people in plans offered by employers, but the notice should indicate that if that’s the case. Otherwise, access to Medicaid isn’t affected by eligibility for employer-sponsored coverage. That means that if the person is eligible for Medicaid based on the normal criteria (income and immigration status), they can have Medicaid instead of the employer-sponsored plan. But your employer might need to see proof that your daughter is covered by the state Medicaid program. You’ll need to check with your employer to see exactly what it is they need from you.

Danny v
Danny v
1 year ago

I just tried to put her on my Medicaid and they said I can’t because she already has

Laurie Stanley
Laurie Stanley
5 months ago

I will be going on Medicare insurance on August 01, 2022. I carry the insurance for my spouse and my 22 year old son. He’s just graduating college and does not have a job yet with health insurance coverage. Neither will my husband for 18 months until he reaches Medicare age. What do suggest for coverage for my son who is often ill. His income right now is less than $15000 per year.
Should my husband look for a policy that covers both of them?

Louise Norris
5 months ago
Reply to  Laurie Stanley

I would recommend that you connect with a health insurance broker in your area who can help you sort through the various options. But a few things to keep in mind:

  • I assume you’re not going to continue to work, and thus the employer-sponsored health plan will end? (if you’re continuing to work and will keep your employer-sponsored health insurance, your husband and son should also be able to stay on it).
  • If your employer-sponsored health plan is ending, COBRA (or state continuation, if it’s a small employer) may be a viable option for your husband and son.
  • If your husband and son are going to transition to the individual/family market, you’ll want to start by looking at plans in your state’s health insurance exchange/marketplace. In most states, this is, although there are 18 fully state-run exchanges:
  • Your son can remain on a policy will his father until he turns 26. But it might be advantageous to have them on their own separate plans, depending on whether they live in the same area, have similar health needs, etc.
  • If you’re in a state that has expanded Medicaid, your son will likely qualify for Medicaid. In the continental US, expanded Medicaid is available for a single person with an income of up to $18,754 this year. Since your son will no longer be a tax dependent after he graduates, his eligibility for Medicaid would be based on just his own income. If he were to get a job later in the year, he could transition to an employer-sponsored health plan or to a marketplace/exchange plan with subsidies based on his new income.
Would love your thoughts, please comment.x