Wisconsin Subminimum Wage & Tipped Employees 2026: Employer Guide
- Wisconsin adheres to the federal subminimum wage for tipped employees, which is $2.13 per hour in 2026.
- Employers can claim a tip credit of up to $5.12 per hour, ensuring total earnings meet the federal minimum wage of $7.25 per hour.
- For a single tipped employee earning $25,000 annually, substantial ACA marketplace subsidies may reduce monthly health insurance premiums to $0–$50.
- Wisconsin has not expanded Medicaid, creating a coverage gap for many low-income adults below 100% FPL who do not qualify for marketplace subsidies.
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Wisconsin's Tipped Minimum Wage Rules for 2026
Wisconsin's approach to tipped wages aligns with federal Fair Labor Standards Act (FLSA) guidelines. For 2026, the federal minimum wage is $7.25 per hour. Employers of tipped employees can pay a direct cash wage of $2.13 per hour, taking a tip credit of up to $5.12 per hour. This tip credit is only permissible if the employee's tips, when added to the direct wage, equal or exceed the federal minimum wage. If an employee's tips do not bring their total earnings to at least $7.25 per hour for all hours worked, the employer must pay the difference. This system ensures that while a subminimum cash wage is allowed, the effective hourly rate for tipped employees always meets or exceeds the federal minimum wage.Impact of Tipped Income on Health Insurance Eligibility
For tipped employees, income can be variable, making health insurance planning complex. Eligibility for ACA marketplace subsidies, known as premium tax credits (APTCs), is based on Modified Adjusted Gross Income (MAGI). For a single person in 2026, MAGI between $15,060 (100% FPL) and $60,240 (400% FPL) typically qualifies for subsidies on HealthCare.gov.Because Wisconsin has not expanded Medicaid, individuals below 100% FPL, or $15,060 for a single person, generally fall into a coverage gap unless they are pregnant or have dependent children. This means they are ineligible for both Medicaid and marketplace subsidies. For those above 100% FPL, subsidies can significantly reduce monthly health insurance premiums, making coverage much more affordable.
| Household Size | 100% FPL | 138% FPL | 150% FPL | 200% FPL | 250% FPL | 400% FPL |
|---|---|---|---|---|---|---|
| 1 person | $15,060 | $20,783 | $22,590 | $30,120 | $37,650 | $60,240 |
| 2 people | $20,440 | $28,207 | $30,660 | $40,880 | $51,100 | $81,760 |
| 3 people | $25,820 | $35,632 | $38,730 | $51,640 | $64,550 | $103,280 |
| 4 people | $31,200 | $43,056 | $46,800 | $62,400 | $78,000 | $124,800 |
| 5 people | $36,580 | $50,480 | $54,870 | $73,160 | $91,450 | $146,320 |
| 6 people | $41,960 | $57,905 | $62,940 | $83,920 | $104,900 | $167,840 |
| +1 additional | +$5,380 | +$7,424 | +$8,070 | +$10,760 | +$13,450 | +$21,520 |
Source: HHS 2025 Federal Poverty Guidelines (applied to 2026 ACA plan year).
Recommended Health Insurance Plan Tiers for Tipped Employees
Choosing the right health insurance plan tier depends heavily on a tipped employee's income stability and anticipated healthcare needs. The ACA marketplace offers Bronze, Silver, Gold, and Platinum plans. For those with lower incomes, Silver plans often provide the best value due to Cost-Sharing Reductions (CSRs).| Income Level | FPL % | Recommended Tier | Monthly Net Premium | Why |
|---|---|---|---|---|
| Under $15,060 | Under 100% FPL | Coverage Gap | N/A | Wisconsin has not expanded Medicaid; generally ineligible for subsidies or Medicaid. |
| $15,060–$22,590 | 100–150% FPL | Silver (CSR Tier 1) | ~$0–$30 | Eligible for maximum subsidies (APTC) and strongest CSR, reducing deductibles and out-of-pocket maximums significantly (to ~$1,000). |
| $22,590–$30,120 | 150–200% FPL | Silver (CSR Tier 2) | ~$30–$100 | Strong CSR still applies, reducing OOP max to ~$2,000. Often a better value than Bronze. |
| $30,120–$37,650 | 200–250% FPL | Silver (CSR Tier 3) or Gold | ~$100–$200 | Moderate CSR available on Silver. Gold plans may offer better value if high healthcare usage is expected. |
| $37,650–$60,240 | 250–400% FPL | Gold or HDHP | Varies | No CSR. Gold for higher usage, High Deductible Health Plan (HDHP) with Health Savings Account (HSA) for healthy individuals. |
| Above $60,240 | Above 400% FPL | HDHP+HSA (off-exchange) | Varies | Reduced or no APTC. HSA offers triple tax advantage for those with high deductibles. |
Net premium after APTC. Single adult, benchmark Silver reference. Actual premium varies by state and plan year.
Understanding Employer Health Insurance Obligations
For employers of tipped employees in Wisconsin, the primary obligation related to health coverage stems from the Affordable Care Act's employer mandate. Employers with 50 or more full-time equivalent employees (Applicable Large Employers, or ALEs) must offer affordable health insurance that provides minimum value to their full-time employees, including tipped workers. If an ALE does not offer such coverage, or if the coverage is deemed unaffordable or doesn't meet minimum value, employees may be eligible for ACA marketplace subsidies, and the employer could face penalties. Small employers (fewer than 50 FTEs) are not mandated to offer health insurance but may choose to do so to attract and retain talent. They might also qualify for the Small Business Health Care Tax Credit if they contribute to employee premiums.Health Insurance in Wisconsin: What Tipped Employees Need to Know
Tipped employees in Wisconsin primarily access health insurance through HealthCare.gov, the federal marketplace. Wisconsin's marketplace offers a broad range of plan types, including EPO, HMO, POS, and PPO, providing flexibility in choosing a plan that fits individual needs and preferred provider networks.As a non-Medicaid expansion state, Wisconsin presents a unique challenge for low-income tipped workers. Adults without dependent children who earn below 100% of the Federal Poverty Level (FPL) are typically not eligible for Medicaid and also fall outside the income range for ACA marketplace subsidies, creating a "coverage gap." However, Wisconsin does offer Medicaid coverage for pregnant women and children at higher income thresholds, up to 306% FPL for both. This means a pregnant tipped worker or a tipped worker with children may qualify for state-sponsored health coverage even if their income is relatively low.
Steps for Tipped Employees to Secure Health Insurance
Navigating health insurance options as a tipped employee in Wisconsin involves understanding your income and available programs.- Estimate Your Annual Income: Accurately estimate your total annual income, including both direct wages and tips. Remember that tips are taxable income and must be reported. This estimate is crucial for determining your FPL and potential subsidy eligibility.
- Check Medicaid Eligibility: If your income is very low, especially if you are pregnant or have dependent children, first check eligibility for Wisconsin's Medicaid and CHIP programs. These programs offer comprehensive, low-cost coverage for qualifying individuals.
- Explore HealthCare.gov for Subsidies: If you are not eligible for Medicaid, or if you are between 100% and 400% FPL, apply for coverage through HealthCare.gov during Open Enrollment or if you qualify for a Special Enrollment Period (SEP). You may be eligible for significant premium tax credits.
- Consider Silver Plans with CSR: If your income falls between 100% and 250% FPL, prioritize Silver-tier plans. These plans are the only ones that offer Cost-Sharing Reductions (CSRs), which lower your deductibles, copayments, and out-of-pocket maximums, providing much better financial protection than a Bronze plan for the same or similar net premium.
- Report Income Changes: Due to the variable nature of tipped income, it's important to report any significant changes in your projected annual income to HealthCare.gov throughout the year. This helps ensure your subsidies are accurate and can prevent issues during tax reconciliation.
Frequently Asked Questions
What is the subminimum wage for tipped employees in Wisconsin in 2026?
In 2026, Wisconsin follows the federal subminimum wage for tipped employees, which is $2.13 per hour. Employers can take a tip credit against the federal minimum wage of $7.25 per hour, provided the employee's tips plus their direct wage equal at least $7.25 per hour.
How does tipped income affect eligibility for health insurance subsidies in Wisconsin?
Tipped income, combined with any direct wages, forms an employee's household income which is used to determine eligibility for Affordable Care Act (ACA) marketplace subsidies. If a tipped employee's Modified Adjusted Gross Income (MAGI) is between 100% and 400% of the Federal Poverty Level (FPL), they may qualify for significant premium tax credits to reduce the cost of health insurance on HealthCare.gov.
Are employers in Wisconsin required to offer health insurance to tipped employees?
No, employers in Wisconsin are not generally required to offer health insurance to tipped employees unless they are considered an Applicable Large Employer (ALE) under the ACA, meaning they have 50 or more full-time equivalent employees. Even then, the offer must meet affordability and minimum value standards to prevent employees from qualifying for marketplace subsidies.
What happens if a tipped employee's wages and tips don't meet the minimum wage?
If an employee's direct cash wage of $2.13 per hour, plus their tips, does not equal at least the federal minimum wage of $7.25 per hour, the employer is legally obligated to make up the difference. This ensures that all employees, including tipped workers, receive at least the federal minimum wage for all hours worked.
Can tipped employees in Wisconsin get Medicaid?
Wisconsin has not expanded Medicaid. Adults without dependent children typically do not qualify for Medicaid regardless of income. For individuals with children or pregnant women, eligibility extends higher, with pregnant women qualifying up to 306% FPL and children up to 306% FPL through Wisconsin's Medicaid and CHIP programs.