We get health insurance through my job, but the coverage isn’t very good. Can I enroll in an exchange plan instead, and get a subsidy to help pay for it?

Q. My income is about $50,000 and I have one child. We get health insurance through my job, but the coverage isn’t very good. Can I enroll in an exchange plan instead, and get a subsidy to help pay for it?

A. Just about anyone can enroll in an exchange (Marketplace) plan. But eligibility for a subsidy depends on how much your group plan costs and the quality of the coverage. Based on income alone, you’d likely be eligible for a subsidy. But regardless of your income, you’re not eligible for a subsidy if you have access to an employer-sponsored plan that is “affordable” and meets “minimum value” requirements.

Affordability test

“Affordable” means that the premium you pay has to be no more than 9.02% of your household income in 2025¹ (this percentage is indexed annually).

As a result of the IRS fix for the “family glitch,” affordability is now determined for both the employer and the whole family. If the employee’s coverage is considered affordable but the family coverage is not, the family members can potentially qualify for income-based subsidies in the Marketplace. But subsidy eligibility will also depend on the family’s total household income. Here’s more about how this works.

Minimum value test

“Minimum value” means that the plan pays for at least 60% of covered services, and provides “substantial coverage” for inpatient and physician services. All new (since 2014) plans in the small-group market have to meet this threshold, since compliance with metal levels and essential health benefits would automatically make a plan compliant with the minimum value requirements. Large group and self-insured health plans aren’t subject to those rules. If your group plan doesn’t meet minimum-value requirements, you’d be able to apply for a plan in the exchange and qualify for a subsidy.

But most employer-sponsored plans do conform to the minimum-value rules. Large employers have to pay penalties if they offer plans that don’t meet the minimum value requirements and have employees who opt for a subsidized exchange plan instead. So there’s an incentive for large employers to make sure that their plans do meet minimum value rules.

Subsidy eligibility also depends on the cost of the benchmark plan relative to your income

If your plan changes mid-year such that it either becomes unaffordable or stops providing minimum value, you’ll have access to a special enrollment period during which you can enroll in a plan through the exchange, potentially with a subsidy assuming you’re still eligible based on income.

But even if your employer’s plan isn’t adequate, eligibility for premium subsidies also depends on how much you’d have to pay for the benchmark plan without a subsidy. If that amount is already considered affordable, you wouldn’t qualify for a subsidy. This is fairly rare, but it does sometimes happen if the applicant is fairly young and living in an area where health insurance is fairly inexpensive.

Medicaid or CHIP is often an option for middle-class children

A quick word about CHIP (the Children’s Health Insurance Program) and Medicaid: Income limits for kids to qualify for coverage under Medicaid or CHIP are different in each state, ² but they can be quite a bit higher than the income limits for adults to qualify for Medicaid. A household of two with an income of $50,000 is at about 245% of the poverty level in 2024, which would make the child eligible for CHIP or Medicaid in almost every state. If adding your kids to your employer’s plan feels unaffordable for your family, be sure to check with your state to see if your kids might be eligible for Medicaid or CHIP instead.

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 healthinsurance.org.

1. “Revenue Procedure 2024-35”. Internal Revenue Service. Accessed Oct. 28, 2024. ⤶
2. ”Medicaid, Children’s Health Insurance Program, & Basic Health Program Eligibility Levels” Centers for Medicare & Medicaid Services. December 2023. ⤶