ACA vs. Employer Health Insurance: What’s the Better Deal?

Eligibility and Enrollment

Employer-Sponsored Insurance (ESI)

• Available only if your employer offers a health plan

• You may need to work a minimum number of hours per week (often 30+)

• Employers typically offer open enrollment once per year

• Includes coverage for spouses and dependents (at additional cost)

ACA Marketplace Insurance

• Available to anyone not on Medicare, Medicaid, or employer coverage

• Open Enrollment runs from November 1 to January 15 (in most states)

• Special Enrollment Periods (SEPs) available after life events like job loss, marriage, or birth

• Offers coverage for individuals, couples, and families

If you’re offered affordable coverage through your job, you generally won’t qualify for subsidies on the Marketplace. However, there are important exceptions (covered below).

Cost Comparison: Premiums and Out-of-Pocket Costs

Employer Plans

• Employers pay a portion of your monthly premium—often 70–80% for individuals

• Premiums are usually deducted pre-tax, lowering your taxable income

• Lower deductibles and copays than Bronze/Silver ACA plans

• May offer better drug coverage or access to broader networks

ACA Plans

• Premium tax credits (subsidies) available for individuals earning up to 400% of the federal poverty level—and in some cases, above that

• Cost-sharing reductions available on Silver plans for low-to-moderate income households

• Plans vary by metal tier: Bronze (low premium, high out-of-pocket) to Platinum (high premium, low out-of-pocket)

• Premiums and deductibles can be higher without subsidies

The key tipping point:

• If your employer plan costs more than 8.39% of your household income in 2024 for employee-only coverage, you may qualify for ACA subsidies—even if you’re offered a job-based plan. This is known as the “affordability test.”

More on this from Healthcare.gov: Job-Based Insurance and the Marketplace

Coverage Options and Flexibility

Employer Plans

• Typically offer 1–3 plan options (e.g., PPO, HMO, or HDHP)

• Often limited to a specific insurer or network

• Easier to manage through HR

• May include access to Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs)

ACA Plans

• Wide selection of plans across metal tiers and insurers

• Easier to tailor coverage to individual needs (e.g., chronic conditions, specific drug coverage)

• Offers better flexibility for freelancers, gig workers, and small business owners

• Not tied to your job—coverage stays with you regardless of employment status

For those who move frequently, switch jobs, or freelance, ACA plans provide continuity and independence that employer coverage cannot.

Family Coverage and the “Family Glitch” Fix

Before 2023, many families fell into the so-called “family glitch”—when employer coverage was affordable for the worker, but unaffordable for their spouse or children. This made the whole family ineligible for ACA subsidies.

But as of December 2022, the Biden administration fixed the family glitch. Now, the affordability test applies to family premiums, not just the individual employee’s share.

This means:

• Families with expensive job-based coverage can now qualify for Marketplace subsidies.

• In some cases, it makes sense for the employee to stay on the employer plan while the family enrolls in an ACA plan with subsidies.

Learn more: IRS Guidance on the Family Glitch Fix

Network Access and Quality of Care

Employer Plans

• Often include broad PPO networks

• Better access to high-cost specialists and name-brand hospitals

• May include national coverage, helpful for frequent travelers

ACA Plans

• Often have narrow networks, especially in Bronze and Silver tiers

• May not cover out-of-network care unless it’s an emergency

• Regional differences can be significant—some areas have fewer high-quality ACA options

If staying with a specific doctor or hospital is a top priority, check provider directories before making the switch.

Additional Benefits

Employer Plans Often Include:

• Dental and vision coverage

• Disability insurance

• Employee wellness programs

• Employer contributions to HSAs or FSAs

ACA Plans Typically Include:

• The 10 Essential Health Benefits, such as maternity care, mental health, and prescription drugs

• Preventive care (e.g., screenings, vaccines) at no extra cost

• Optional dental/vision plans (for adults) may be available, but usually cost extra

When ACA Might Be the Better Deal

Consider switching to an ACA plan if:

• You’re self-employed, unemployed, or don’t qualify for employer benefits

• Your employer plan is unaffordable (costs more than 8.39% of your income)

• You want more plan choices or control over coverage

• You qualify for subsidies or cost-sharing reductions

• You lost your job and can’t afford COBRA coverage

Use the Healthcare.gov calculator to estimate savings: HealthCare.gov Estimator Tool

When to Stick With Employer Coverage

Your employer plan might be the better deal if:

• Your employer pays a large share of the premium

• You have a broad provider network or access to premium hospitals

• You prefer the simplicity of one HR-managed plan

• You don’t qualify for ACA subsidies due to household income

Also, if you’re nearing retirement, staying on your employer’s plan could offer better coverage until you transition to Medicare.

Bottom Line

Both ACA Marketplace and employer-sponsored insurance offer robust coverage—but the better deal depends on your unique circumstances. Thanks to recent rule changes, many families now have more flexibility to compare options and choose what’s best.

Take the time to compare premiums, deductibles, networks, and available subsidies—you might be surprised which plan offers the best value.

For more information, visit:

• Healthcare.gov – Compare Plans

• KFF – Employer vs. ACA Plan Comparison

• IRS – ACA Affordability Rules