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When your job offers health insurance, the marketplace can feel irrelevant. But employer coverage is not automatically the better deal, especially now that marketplace subsidies shrank after the enhanced credits expired. Comparing the two takes more than glancing at the premium.
Start with the number nobody shows you
An employer plan has two prices: what you pay from your paycheck and what your employer pays behind the scenes. A marketplace plan shows one price, minus any tax credit you qualify for. To compare fairly, add up the full yearly cost of each option: 12 months of premiums plus what you would likely spend on care, using the deductible and out-of-pocket maximum as your guardrails. Our guide to bronze vs silver total costs shows how that math works in practice.
One wrinkle: marketplace subsidies and employer coverage do not mix. If your employer offers you a plan that meets minimum value and costs less than the IRS affordability threshold for employee-only coverage, you generally cannot get a premium tax credit on the marketplace. The threshold is set each year, so check the current figure rather than guessing.
When the marketplace can win
Employer plans are usually cheaper for the employee because the company subsidizes the premium. But there are exceptions. If your employer’s plan has a high employee contribution, a narrow network, or a deductible that would wreck your budget, a marketplace plan might cost less in total. This is more plausible than it used to be for households that still qualify for solid tax credits, though with the 400 percent income cliff back in force, higher earners get no help on the exchange.
Family coverage is where the comparison gets interesting. Some employers contribute generously to employee-only premiums but little to family premiums. If adding your spouse and kids to the work plan costs a fortune, pricing marketplace coverage for the family, or splitting the family across two plans, is worth an hour of your time.
When the employer plan usually wins
If the company pays most of the premium, take it. Employer plans also come with pre-tax payroll deductions, which lower the real cost by your marginal tax rate, and group plans cannot medically underwrite you. The marketplace cannot beat a heavily subsidized employer plan on price, and it rarely beats one on convenience either.
How to run the comparison
Pull the summary of benefits for the employer plan and price the closest marketplace equivalents during open enrollment. Compare total yearly cost at three care levels: a healthy year, an average year, and a bad year where someone hits the out-of-pocket maximum. Check whether your doctors and prescriptions are covered under each option, since a cheaper plan that excludes your doctor is not cheaper. And remember that premiums are set by factors like age and location on the marketplace, while your employer plan spreads those costs across the whole workforce.
