Employer health plan eligibility tested as ACA Marketplace shrinks

Hourly and part-time employees who bought coverage on the ACA Marketplace are running out of affordable options, and a good share of them will come looking at the company health plan. Whether they can get into it depends on eligibility rules most employers haven't revisited in years.

On August 31, 2026, the Centers for Medicare & Medicaid Services (CMS) canceled about 315,000 Marketplace enrollments covering more than 760,000 people after deciding they were unauthorized, according to the agency's anti-fraud fact sheet on the cancellations. The individual market was already shrinking before that. Enrollment dropped 13 percent from its 2025 peak to 19.2 million people by February 2026, once enhanced premium tax credits under the Affordable Care Act (ACA) expired at the end of 2025.

Researchers at the Urban Institute estimated that 3.2 million more people would end up in employer-sponsored insurance in 2026 than would have if the enhanced subsidies had stayed.

Eligibility gaps are widest in hourly workforces

The KFF 2025 Employer Health Benefits Survey found that among employers offering health benefits, 80 percent of workers are eligible for the company plan. At firms with large numbers of lower-wage workers the figure is 67 percent, and in retail it's 53 percent. Just 27 percent of large firms that offer health coverage make it available to part-time staff.

Those are also the employees most likely to have been on subsidized Marketplace plans, so the pressure will show up first in retail and other shift-based workforces.

Federal law doesn't force the issue. Under the ACA's employer shared responsibility rules, applicable large employers, generally those with 50 or more full-time equivalent employees, have to offer affordable coverage to people averaging 30 or more hours a week. Anyone below that can be left out without a penalty. If eligibility widens, it'll be because HR and finance decided it was worth paying for.

Costs are moving in the wrong direction

That decision comes in a bad year for it. Marsh's preliminary National Survey of Employer-Sponsored Health Plans projects employer health benefit costs will rise 8.2 percent in 2027, the biggest jump since 2003, even after planned cost-cutting. In HRD's earlier coverage of the 2027 health cost forecast from Marsh, the survey also showed 59 percent of employers plan cost-cutting changes, and about two-thirds of large employers expect to raise the employee share of premiums.

Adding part-time or newly hired hourly staff to the plan raises enrollment and claims. Leaving them out can cost people, particularly where a competitor nearby offers coverage and the pay is roughly the same.

There's usually more flexibility in plan design than a straight yes or no. Waiting periods, hours thresholds, contribution tiers by pay band and a cheaper plan option for lower-paid staff can all change the math, and many employers are already rethinking where benefits dollars go ahead of 2027 renewals.

Deductibles are climbing for people who stay on the Marketplace

Employees' spouses, dependents and part-timers who keep individual coverage are taking on more risk. Bronze plans made up 40 percent of 2026 Marketplace selections, compared with 30 percent the year before, and the average deductible rose 37 percent to a record $3,786, according to KFF's analysis of 2026 Marketplace coverage published this year.

Accident, critical illness and hospital indemnity coverage can help with a large deductible where employers offer it outside full medical eligibility. Piling on products has its own problems, though. Nicole Negvesky, executive vice president of employee benefits at Alera Group in Chicago, has warned that stacking supplemental coverage without education leaves employees with menus they don't understand and don't use.

"Historically, we've seen very low utilization of supplemental plans," Negvesky said in an interview earlier this month.

Fewer brokers on the Marketplace

CMS has also barred new agents and brokers from the federally facilitated Marketplace until February 1, 2027. Employers that refer ineligible workers to outside enrollment help may find fewer new brokers taking clients during the 2027 open enrollment period.

The eligibility rules in most plan documents were written when a subsidized individual market picked up the workers the group plan didn't cover. Benefits teams setting 2027 eligibility and contribution strategy are now working without that backstop.