For ten years, the ACA's affordability test had a structural gap: it measured only the cost of the employee's individual coverage, not what the employee's family would actually pay to join the employer plan. Families locked out of Marketplace subsidies by coverage they could not realistically afford had no recourse until Treasury issued a final rule in October 2022. The fix, effective January 1, 2023, changed how affordability is calculated for dependents.
Key Takeaways
- The family glitch existed because the ACA's affordability test only measured the employee-only premium
- Treasury's October 2022 final rule added a separate family affordability threshold, effective January 1, 2023
- In 2026, employer family coverage is unaffordable if it exceeds 9.02 percent of household MAGI
- Dependents in unaffordable family coverage can qualify for Marketplace APTC independent of the employee's eligibility
- The employee remains ineligible for APTC if the employee-only premium clears the affordability threshold
How the original affordability test created the problem
The ACA bars Marketplace APTC for individuals who have an offer of affordable employer-sponsored coverage. Congress defined affordable as coverage where the employee's required contribution for self-only coverage does not exceed a set percentage of household income. The statutory language said "self-only," and IRS interpreted that to mean the employee-only premium was the affordability test for the entire family.
The result: a family where the employee's individual premium was $150 per month (affordable at almost any income level) but the family premium was $1,200 per month had no path to APTC. The employer's offer was classified as affordable because the individual-tier number cleared the threshold. Whether the family tier was within reach did not factor in.
What the 2022 rule changed
| Period | Rule | Outcome for dependents |
|---|---|---|
| 2010 to 2022 | Employee-only premium tested | Dependents locked out if employee coverage was affordable |
| October 2022 | Treasury final rule published | Separate family affordability test established |
| January 1, 2023 | Rule effective date | Dependents in unaffordable family coverage became APTC-eligible |
| Plan year 2026 | Threshold: 9.02% of household MAGI | Family premium above threshold triggers dependent APTC eligibility |
Illustrative timeline. Actual eligibility depends on household income, employer plan structure, and plan year CMS affordability thresholds.
Under the 2022 rule, the IRS now runs two separate tests. The employee's eligibility is still determined by the employee-only premium against the income threshold. The dependents' eligibility is now determined by the lowest-cost family tier option the employer offers. If that family tier premium exceeds the applicable percentage of household MAGI, the dependents are not considered to have an affordable offer and can receive APTC on the Marketplace.
The 2026 affordability numbers
CMS sets the affordability percentage each plan year through the applicable percentage table. For 2026, the threshold is 9.02 percent of household MAGI. That applies to both the employee-only test and the family tier test introduced by the 2022 rule.
Example: a household of three with MAGI of $68,000 has an annual affordability ceiling of $6,133 (9.02 percent), or about $511 per month. If the employer's lowest family tier premium is $650 per month, coverage is unaffordable for the dependents. The spouse and dependent child can enroll in a Marketplace Silver plan and receive APTC. The employee, whose individual premium may be $180 per month, is still ineligible for Marketplace subsidies.
Broker workflow for family glitch households
The most common mistake is asking only whether the client has employer coverage and stopping there. The correct intake question is: what does the employer charge for the family tier, and what is the household's MAGI?
Collect the employer's Summary Plan Description or the annual benefit election notice, both of which list premium tiers by coverage level. Compare the family tier premium to 9.02 percent of MAGI. If the family premium is above the threshold, proceed with a Marketplace enrollment for the dependents. The employee remains on the employer plan.
This split enrollment approach is valid under the 2022 rule. The employee is not required to cover dependents through the employer plan as a condition of the dependents' Marketplace eligibility. Dependents can be on a Marketplace plan even if the employee declines employer family coverage and stays on self-only.
SEP and OEP considerations for family glitch fixes
Clients who were previously denied APTC because of the pre-2023 affordability rule and are still uninsured or paying full-price Marketplace premiums should review eligibility during OEP. There is no retroactive APTC for years prior to 2023. But households who were classified as ineligible and did not enroll because of the cost now have a clear path to subsidized coverage.
A Special Enrollment Period may be available if the client recently lost employer coverage, changed jobs, or had a household income change. For households with stable situations who simply did not know the rule changed, the next OEP is the entry point.
ACA family glitch: what brokers need to know
Regulatory context and practical workflow answers on the 2022 Treasury fix.
What was the ACA family glitch?
The family glitch was a gap in how the ACA defined affordable employer coverage. The law tested affordability using only the employee-only premium: if that single premium was below the income threshold, the entire family was deemed to have an offer of affordable coverage and was locked out of Marketplace subsidies. The problem was that adding a spouse and children to an employer plan often cost two to five times the employee-only premium. Families where employer coverage consumed 30 percent of household income were ineligible for APTC because the employee's individual portion was below the threshold.
What did the 2022 Treasury rule actually change?
Treasury's final rule, published October 2022 and effective January 1, 2023, added a separate affordability test for family members. Under the new rule, employer family coverage is unaffordable for dependents if the employer's lowest-cost family tier premium exceeds the applicable income threshold. In 2026, that threshold is 9.02 percent of household MAGI. If the family premium clears that percentage, dependents can enroll in a Marketplace plan and receive APTC even though the employee remains on the employer plan and ineligible for subsidies.
Does the employee qualify for APTC under the family glitch fix?
No. The affordability test for the employee did not change. The employee's eligibility is still based on the employee-only premium against the same 9.02 percent threshold in 2026. If the employee-only portion is affordable, the employee cannot receive APTC. The fix only applies to family members: it allows them to be evaluated separately based on the family tier cost rather than inheriting the employee's affordability determination.
How does a broker calculate whether family coverage is unaffordable?
Collect the employer plan's lowest-cost option that covers the employee and at least one dependent (typically the employee-plus-family or employee-plus-spouse tier). Multiply the household MAGI by 9.02 percent (the 2026 threshold). If the family premium exceeds that dollar amount, coverage is unaffordable for the dependents. Example: a household with MAGI of $72,000 has a threshold of $6,494 per year, or about $541 per month. If the employer's family premium is $700 per month, the dependents qualify for Marketplace APTC. The employee does not.
What documentation do clients need for a family glitch APTC claim?
Clients will need documentation of the employer's plan offering, specifically the premium for the lowest-cost family tier option. Healthcare.gov will ask about employer coverage during enrollment and will use the family premium to verify the affordability threshold. Brokers should collect the employer's Summary Plan Description or a written quote of the family tier premium before starting the enrollment. If the employer provides an annual benefit election notice, that document typically includes the needed premium figures.
