As we look ahead to 2025, many Americans may be wondering, "How do I know if my job-based health insurance is considered affordable?" Under the Affordable Care Act (ACA), there's a clear rule to help determine this. In 2025, a job-based health plan is considered affordable if your share of the monthly premium for the lowest-cost plan available from your employer is less than 9.02% of your household income.
Let’s break that down in simple terms.
What Does "Affordable" Mean Under the ACA?
The ACA sets affordability thresholds to make sure that people aren't spending too much of their income on health insurance. In 2025, your health insurance is affordable if the amount you have to pay for your monthly premium (for the lowest-cost plan your employer offers) is less than 9.02% of your household income. If it’s more than that, you may be able to qualify for financial help through the Health Insurance Marketplace instead.
Easy-to-Understand Example
Let’s say you’re an individual with a household income of $50,000 in 2025. How much would your job-based plan need to cost to still be considered affordable?
Step 1: Find 9.02% of your household income:
- 9.02% of $50,000 is $4,510.
Step 2: Divide that number by 12 to get the monthly limit:
- $4,510 ÷ 12 = $375.83.
In this case, your job-based health plan would be affordable if your share of the monthly premium for the lowest-cost plan is less than $375.83. If it costs more than this, your plan may not be considered affordable, and you might qualify for subsidies through the Marketplace.
What If Your Household Income Is Higher?
Let’s say you have a household income of $80,000.
Step 1: Find 9.02% of $80,000:
- 9.02% of $80,000 = $7,216.
Step 2: Divide by 12:
- $7,216 ÷ 12 = $601.33.
In this case, your plan would be affordable if your share of the premium is less than $601.33 per month.
What Does "Affordable" Mean Under the ACA?
The ACA sets affordability thresholds to make sure that people aren't spending too much of their income on health insurance. In 2025, your health insurance is affordable if the amount you have to pay for your monthly premium (for the lowest-cost plan your employer offers) is less than 9.02% of your household income. If it’s more than that, you may be able to qualify for financial help through the Health Insurance Marketplace instead.
What If My Plan Isn’t Affordable?
If your employer’s plan isn’t affordable according to this standard, you might have other options:
- Marketplace Plans: You can explore plans on the Health Insurance Marketplace, where you may qualify for premium tax credits or subsidies to lower your monthly costs.
- Medicaid: Depending on your state and income level, you might be eligible for Medicaid, which provides free or low-cost coverage.
The Family Glitch Fix: What It Means for Your Family
In previous years, there was an issue known as the “family glitch,” which left many families without access to affordable health insurance. Before the fix, the affordability of job-based health insurance was only measured by the cost of covering the employee, not their family members. Even if adding dependents or a spouse made the total premium unaffordable, families were still locked out of subsidies on the Marketplace.
Fortunately, in recent years, this "family glitch" has been fixed, and here's what that means for your family in 2025.
Under the new rules, if the cost to cover your entire family (including dependents or a spouse) is more than 9.02% of your household income, your family members may now qualify for subsidies on the Health Insurance Marketplace. This fix allows families to get financial help to purchase more affordable coverage, even if the employer-based plan is affordable for the employee alone.
Example of the Family Glitch Fix in Action
Let’s go back to our example household with a total income of $50,000.
Step 1: We know that 9.02% of $50,000 is $4,510 for the year, or $375.83 per month.
Step 2: Now let’s say your share of the premium for just you (the employee) is only $300 per month—so it’s considered affordable for you. But, when you add your spouse and two kids to the plan, the monthly premium jumps to $900 per month.
Step 3: Since the $900 premium for your family coverage is much higher than the $375.83 affordability threshold, the plan is no longer affordable for your family. Thanks to the family glitch fix, your spouse and kids may now qualify for subsidies on the Health Insurance Marketplace, even though your employer’s plan is still affordable for you.
