Adding your kids at work costs too much? Here are your options

Here is a real example, rounded, with no names. A parent paid about $300 a month for their own coverage at work. Adding one child took the bill to about $900 a month. Same plan, three times the price. Every work plan is different. Some employers help pay for family coverage and some don't, so your numbers will be different. That extra $600 a month for one child is what sends people looking for another way. There are a few to check.

The 2022 rule change, often called the family glitch fix

For years, whether a work plan counted as "affordable" for your spouse and kids was judged on what you paid to cover yourself alone. If your own coverage was cheap enough, your family was shut out of Marketplace tax credits, no matter what family coverage cost. People called that the family glitch.

An IRS rule published in October 2022 changed the test. Affordability for family members is now "determined based on the employee's share of the cost of covering the employee and those family members, not the cost of covering only the employee". It took effect December 12, 2022.

The IRS questions and answers on the premium tax credit spell out what that means for a family:

• You, the employee, can't get a credit for Marketplace coverage while you're enrolled in the work plan, even if the work plan is unaffordable.
• A family member who isn't on the work plan and enrolls in Marketplace coverage may be eligible for a credit.
• If the work plan is affordable for your family members and meets minimum standards, they aren't eligible for a credit, even if they skip the work plan.

How the test works, with round numbers

The line is a percentage of household income that the IRS adjusts every year. It is 9.96% for plan years that start in 2026 and 10.22% for plan years that start in 2027. If your share of the cost to cover you and your family members is more than that, the work plan counts as unaffordable for them.

Using the example above, a year of each price looks like this:

Take a household earning $80,000. For a 2026 plan year, 9.96% of that is $7,968 a year, or about $664 a month. Covering the parent and the child at work costs $900 a month, which is more than $664, so the work plan counts as unaffordable for the child. The parent's own $300 is well under the line, so the parent stays put. For a 2027 plan year the line at that income is about $681 a month, and the answer is the same.

That test is only half of it. Income is the other half, covered below. If your employer offers more than one plan, note that HealthCare.gov describes the test as using your share of the premium for the lowest-cost plan the employer offers, so check the cheapest plan's price, not only the one you're on.

Route 1: You keep the work plan, your kids get their own Marketplace plan

Insurers that sell on the Marketplace must offer a child-only plan, at the same coverage level as their other Marketplace plans, to anyone who hasn't turned 21 by the start of the plan year. So your kids can be on their own plan while you stay on yours at work.

Whether they get help paying for it comes down to two checks:

• The family price at work is over the line: your share of the cost to cover you and them is more than 9.96% of household income (10.22% for 2027 plan years).
• Your household income is at or under 400% of the federal poverty level for your household size. The IRS's 2027 credit table ends at "not more than 400%".

Pass both and your kids may qualify for a credit. Miss either one and a child-only Marketplace plan is still there, at full price.

One more thing before you count on a credit. The IRS figures it as the price of a benchmark silver plan for the people you enroll, minus a certain percentage of your household income. With only a child enrolled, at some incomes that leaves a small credit or none. Get the real number for your kids before you take anyone off the work plan.

Route 2: The whole family moves together

Sometimes the better move is for everyone to leave the work plan and go onto one plan outside it. There are two ways to do that.

A private-market plan. On the private-market plans I place, a person has to be 18 or older to have a plan of their own. A younger child can only be covered as a dependent on a parent's plan. So with young kids, the private-market route means the family moves together. Many private-market plans aren't ACA plans; those take applications any time of year, and approval is based on your health answers up front. For a healthy family that earns too much for a credit, a private-market plan outside the ACA can often cost less than the Marketplace. They cover things differently, so compare the benefits, not only the price. The private vs. marketplace guide walks through the tradeoff.

A Marketplace family plan. Everyone on one Marketplace plan. The same credit rules apply: if your work plan is affordable for you on its own, you can't get a credit for yourself even after you leave it, though your kids still may under the test above.

Timing matters on both routes. On HealthCare.gov, open enrollment runs November 1 to January 15. Outside that window you need a special enrollment period, and choosing to drop coverage you have as a dependent doesn't qualify on its own. When you're allowed to leave the work plan, or take your kids off it, is set by your employer's plan, so ask HR before you cancel anything. Then line the dates up so nobody goes a month uncovered.

Route 3: In Florida, check KidCare

The state describes Florida KidCare as its health insurance program for uninsured children who meet income and eligibility requirements. Whether your kids qualify depends on your household, and the state decides. Check on the program's own site, floridakidcare.org, alongside the other two routes.

Questions parents ask

Can my kids get their own health insurance plan without me?

On the Marketplace, yes. Insurers there must offer a child-only plan to anyone under 21 at the start of the plan year. On the private-market plans I place, a child under 18 can only be covered as a dependent on a parent's plan, so on that side the family moves together.

What is the family glitch fix?

An IRS rule from 2022. Before it, whether a work plan was affordable for your family was judged on the employee-only price. Now it's judged on your share of the cost to cover you and those family members. If that's more than 9.96% of household income (10.22% for 2027 plan years), family members who aren't on the work plan may qualify for a Marketplace credit, as long as household income is at or under 400% of the federal poverty level.

Can I leave the work plan and get a tax credit for myself?

Not while you're enrolled in it. The IRS says an employee on the work plan can't get a credit for Marketplace coverage. And if the work plan is affordable for you and meets minimum standards, you aren't eligible for a credit even if you turn it down.

When can I move my kids from the work plan to a Marketplace plan?

Usually at open enrollment, November 1 to January 15 on HealthCare.gov. Choosing to drop your kids from the work plan doesn't by itself open a special enrollment period. Ask HR when your plan lets you make the change, and line the dates up so there's no gap.

Is a child-only Marketplace plan always cheaper than adding my kids at work?

No. It depends on your income, whether your kids qualify for a credit, and what plans cost where you live. That's why it's worth pricing both sides before you change anything.

The bottom line

A high price for adding your kids at work doesn't mean you're stuck paying it. Your kids can have their own Marketplace plan, and they may qualify for a credit if the family price is over the line and your income is at or under the cap. Your whole family can move together. And in Florida, KidCare is worth a check. Text or call and we'll run your numbers.