Case Study 3: Employee Safe Harbor Rule
Maria is single and has no dependents. Her employer offers health insurance, but she didn't enroll because she felt it was too expensive. The Marketplace determined that the employer offer was not affordable, and Maria enrolled in Marketplace coverage and received the benefit of advance payments of the premium tax credit (APTC). At the end of the year, she received both a Form 1095-A from the Marketplace and a Form 1095-C from her employer indicating that the employer coverage was affordable.
Because of the employee safe harbor rule, Maria is eligible for the PTC because in good faith she provided the Marketplace information about her employer's offer and the Marketplace determined that the coverage was unaffordable.
In general, for individuals requesting the APTC, the Marketplace determines whether the employer coverage is affordable by comparing the employee's cost of the employer coverage for self-only coverage to household income. If for 2018, the employee's cost for the employer coverage is more than 9.56 percent of projected household income for 2018, the Marketplace will conclude that the employer coverage is unaffordable. The affordability test used by the Marketplace for family members of an employee who are eligible for coverage from the employer is the same as the test for the employee (compare the cost of the employee's self-only coverage to household income).
If the Marketplace determines that, based on projected household income, the employer coverage would be unaffordable, the employer coverage is considered unaffordable for the employer's plan year even if it turns out to cost 9.56 percent or less of the actual household income reported on the tax return. This is referred to as the employee safe harbor.