Many families have one spouse with job-based insurance and a long-running assumption that everyone should be on it. Then the paycheck deductions for adding the kids turn out to be huge, and the question appears: do we have other options? The answer has changed in recent years. Here is how it works in plain English, with the usual note that subsidy and eligibility rules can change.
First, do kids need their own policy?
Children need coverage, but not necessarily their own separate policy. The common sources are:
- A parent's employer plan, adding children as dependents.
- A Marketplace plan for the child alone or for the whole family.
- Medicaid or CHIP, depending on state and household income.
- A plan through the other parent, if parents live apart and a court order applies.
Dependents can generally stay on a parent's plan until age 26 under federal rules, whether or not they live at home or are students.
What the family glitch was
Marketplace premium tax credits are available only if you are not offered "affordable" employer coverage. Under the old approach, affordability was measured by the cost of the employee-only plan. If that was under the affordability threshold, the whole family was treated as having affordable coverage, even if adding a spouse and children made the premium far higher than the threshold. The result was that family members could be shut out of subsidies. People called this the family glitch.
What changed
A federal rule that took effect for 2023 changed the test for family members. Now, affordability for a spouse and children is generally measured by the cost of the family plan, not just the employee-only plan. That means family members in households where the job's family coverage is expensive may now qualify for Marketplace subsidies, while the employee may still be treated as having affordable coverage under the employee-only test. Because rules and thresholds change, confirm the current numbers each year.
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Get my free quoteHow to compare your options
- Get the family cost from HR. Ask for the employee-only premium and the premium for employee plus spouse and children, plus the plan's deductible and network.
- Estimate your household income for the year.
- Price Marketplace plans for the people you are considering moving, with subsidies applied. Our guide to what health insurance costs without a job explains the pricing factors.
- Compare total yearly cost, not just premiums. See deductibles and out-of-pocket maximums.
- Check networks for the pediatrician and hospital your kids use. See HMO vs. PPO vs. EPO.
Things that can complicate it
- Mixed coverage. Splitting a family across plans can mean separate deductibles and out-of-pocket maximums.
- Enrollment timing. You usually need Open Enrollment or a qualifying life event to change coverage. If your employer plan has a waiting period or an open enrollment window, plan around it.
- Income swings. A subsidy is based on an estimate, and mistakes can mean repayment. Read how income changes affect your subsidy.
- Medicaid and CHIP. Children can qualify at higher income levels than adults in many states, so check even if you earn a good salary.
- Waiving the job plan. You may need to decline employer coverage for the family in writing, and that choice may limit when you can rejoin.
A simple example (hypothetical)
Imagine a job plan that costs a modest amount for the employee alone, but a much higher amount to add a spouse and two children, with a high deductible. The family's household income is within the range that earns Marketplace subsidies. A subsidized Silver plan for the spouse and kids could cost less than adding them to the job plan and might have lower cost-sharing. Run the numbers for your own household because every case differs.
When the job plan is still the better value
The employer plan may win if your employer pays a large share of family premiums, the network fits your doctors, or the Marketplace plans in your area have narrow networks. Employer contributions are a valuable benefit that you do not get on the Marketplace, so compare carefully.
Questions to ask HR
Ask three things: what the premium is for employee-only versus employee plus family, whether the plan meets the minimum-value standard, and when the next open enrollment window is. Those answers determine whether family members might qualify for subsidies and how soon you could make a change. Write the numbers down so you can compare them with Marketplace quotes.
How we help
Honorbrook is an independent agency. We compare your employer's cost against Marketplace and Medicaid options for your family and explain the trade-offs. Our help is free because carriers pay us and your premium is the same either way.
Availability and rules vary by state
Health plans, premiums, enrollment rules and state programs differ by state and sometimes by county, and a given plan may not be available in every state. Honorbrook is licensed in the 11 states below; what we can offer you depends on what carriers sell where you live. Each state’s insurance regulator can verify an agent’s license and answer consumer questions.
- Virginia: Virginia Bureau of Insurance
- Maryland: Maryland Insurance Administration
- North Carolina: North Carolina Department of Insurance
- South Carolina: South Carolina Department of Insurance
- Georgia: Georgia Office of Insurance and Safety Fire Commissioner
- Alabama: Alabama Department of Insurance
- Louisiana: Louisiana Department of Insurance
- Texas: Texas Department of Insurance
- Michigan: Michigan Department of Insurance and Financial Services
- Indiana: Indiana Department of Insurance
- West Virginia: West Virginia Offices of the Insurance Commissioner