Understanding ACA Affordability for Employer Insurance
I know there’s a calculator available for determining if employer-provided insurance is considered “affordable,” and I want to make sure I understand how to use it correctly.
I need to obtain health coverage, but I believe my employer’s insurance might not be “affordable.”
My husband earns $51,000 per year and has insurance through his job that costs $45 per paycheck, amounting to $90 per month.
How can I determine the affordability of my employer’s insurance compared to my husband’s coverage as a spouse?
I anticipate making $30,000 in 2025.
My husband’s plan costs over $400 per paycheck, which totals more than $800 per month (with two pay periods per month).
I was previously ineligible for health insurance at my job because I wasn’t working 30 hours a week, but I am now. An employee mentioned they pay $380 per paycheck for their coverage, which seems quite high to me!
I understand that “affordable” insurance should cost less than 9.02% of our combined income. If we combine our incomes, that comes to about $80,000 annually, meaning affordable insurance would cost no more than $7,200 a year. His premium adds up to $1,080 annually, which leaves us with $6,120 a year. Does this mean my premiums would need to be $255 or less per paycheck to be considered “affordable” according to the ACA?
It’s clear that my husband’s employer coverage for me is definitely not affordable!
Am I calculating this correctly?
It looks like you’re on the right track in your understanding of how to calculate affordability under the Affordable Care Act (ACA). Let’s break it down step by step:
Understanding Affordability: The ACA generally considers employer-sponsored health insurance to be affordable if the employee’s share of the premium for the lowest-cost self-only plan does not exceed 9.12% (for 2023 plans) of their household income. This percentage can vary year by year, so make sure to check for the specific year you’re considering.
Combined Income: You mentioned that your combined household income is $80,000 per year (your husband’s $51k and your expected $30k). Therefore, 9.12% of your combined income would indeed be $7,296 per year, which equates to approximately $608 per month.
Calculating Affordability of Your Husband’s Coverage: You indicated that your husband’s employer charges $400 per paycheck (so $800 per month/2 pay periods). You are correct that this would exceed the affordability threshold since $800 is greater than $608. Hence, his coverage is not affordable under the ACA guidelines for your situation.
Calculating the Employer Coverage Offer for You: If you are considering your employer’s coverage, you need to find out the amount you would need to pay for that insurance. If it falls below the affordability threshold (9.12% of your household income), it would be deemed affordable.
Your Employer Premiums: For your premiums to be considered affordable, you would calculate as you did: If your premiums are above the proportionate value of 9.12% of your income, then they would not be deemed affordable. So with a threshold of around $608 monthly, your premium would need to be less than $255 per paycheck (or roughly $510 per month).
Conclusion: As you mentioned, if your employer requires significantly more than this amount for coverage, then it is likely not deemed affordable under the ACA.
It sounds like you’ve analyzed the situation well! To recap, it looks like your husband’s insurance is not affordable based on the ACA’s criteria, and you’ll need to evaluate whether your employer’s offer meets that standard or if you might need to explore other options, like marketplace coverage or Medicaid, depending on your circumstances. Always consider reaching out to a benefits advisor or using the ACA’s resources for more personalized assistance.