Employer Coverage vs. the Marketplace

Getting a job offer with health insurance doesn't automatically mean it's your best deal. Before you enroll, compare it against what the marketplace offers — and do the math on total cost, not just the premium.

The 2027 affordability test

Here's the rule that decides whether you can get marketplace help: for 2027, your employer's coverage is considered "affordable" if your share of the premium for the lowest-cost self-only plan is 10.22% or less of your household income (IRS Revenue Procedure 26-26).

If the plan is affordable and meets minimum value standards, you generally cannot get marketplace premium tax credits — even if the marketplace plan itself would be cheaper.

Quick gut check: if your employer pays most of the premium, you almost certainly can't get credits. If your paycheck deduction for the self-only plan feels painful, run the actual percentage — the test is precise, and plenty of people are surprised to land just under or just over the line.

What to compare: a four-point checklist

1. The premium contribution. What comes out of each paycheck for the plan you'd actually take — self-only, plus spouse, or family. Multiply by the number of pay periods and write down the annual number.

2. The network. Are your doctors in-network? A cheap premium is worthless if your family's pediatrician and your specialist are both out of network. Employer plans can have narrow networks — so can marketplace plans. Check both against the names that matter to you.

3. The deductible and out-of-pocket max. Look at the deductible you'd actually pay before coverage kicks in, and the out-of-pocket maximum — for 2027, plans can't exceed $12,000 individual / $24,000 family, but many employer plans land well below that, which is a real advantage.

4. Total cost: premium + expected care. This is the number that decides it. Add a year's premiums to what you'd likely spend on care — regular prescriptions, the kids' checkups, the condition you're managing. Compare that total across options instead of comparing premiums alone.

When the marketplace wins

• Part-time or hourly workers. If you don't get an employer offer at all (or the offer is unaffordable), the marketplace with tax credits is usually the answer.
• Small employers with skimpy contributions. Some employers technically "offer" coverage but pay so little of the premium that the affordability test fails — opening the door to tax credits.
• Family members priced out of the family plan. Federal rules fixed the old "family glitch": now, family members' eligibility for tax credits is judged on the affordability of family coverage, not self-only coverage. If adding your family to the employer plan costs more than the threshold allows, they may qualify for credits even when you don't.

When the employer plan wins

Usually. Employer plans often have lower deductibles and richer benefits because the employer subsidizes them, and the employer's contribution is tax-free to you. If the premium is manageable and your doctors are in-network, take it and move on — this is the right answer for most full-time workers with decent employer plans.

Frequently asked questions

Can I get a marketplace tax credit if my employer offers insurance? Generally no — if your employer's plan is affordable (your self-only premium share is 10.22% or less of household income for 2027) and meets minimum value. If the offer is unaffordable or below minimum value, you may qualify. See Subsidies in Tennessee for 2027 for the income bands.

My employer offers me cheap coverage but adding my family costs a fortune. What can we do? This is exactly what the "family glitch" fix addresses: your family members' eligibility for premium tax credits is judged on the cost of family coverage relative to household income, not your cheap self-only rate. If the family premium fails the affordability test, your spouse and kids may qualify for credits on the marketplace even though you don't.

What counts toward the 10.22% affordability test? Only the employee's required contribution for the lowest-cost self-only plan that meets minimum value — compared against total household income. Not the family plan price, not the most expensive plan option.

I'm self-employed or work for a small business. Where do I fit in? If your employer doesn't offer coverage at all, you're free to shop the marketplace with no affordability test in the way. Small business owners themselves should look at Health Coverage for Tennessee Small Employers.

Can I have two health plans? Yes, such as your own employer plan plus a spouse's. Coordination of benefits rules decide which pays first. But if either plan is affordable job-based coverage offered to you, you can't get a marketplace tax credit.

Is an employer plan usually better than a marketplace plan? Usually, because the employer pays a large share of the premium. Compare total cost, deductible, and network; if the employer plan fails the 10.22% affordability test or minimum value, a marketplace plan with a tax credit may cost less.

Sources

• IRS Revenue Procedure 26-26: 2027 employer-coverage affordability threshold
• Healthcare.gov: guidance on employer coverage and marketplace eligibility
• 2026 HHS Federal Poverty Guidelines (governing 2027 coverage)

Your next step: Run the affordability test on your offer — if your employer plan fails it or doesn't meet minimum value, see what tax credits could do for you at Subsidies in Tennessee for 2027 or start comparing plans at The Marketplace.