Do I have to accept my employer’s health plan?

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The short answer to this question is “No, but rejecting it might be expensive.”

If you meet your company’s full-time requirements and decline coverage, you will forfeit the marketplace subsidy.

The Affordable Care Act is designed to create greater equality in who is offered health care coverage via their job. As part of this, you can only get the subsidized rate on an individual marketplace plan if the insurance offered by your employer falls short of minimum required standards. We’ve explained these below.

You are always free to purchase an individual plan through the Marketplace, but without the hefty tax credits that make these plans more affordable, you may end up paying a high monthly premium.

Does Your Employer-Based Insurance Meet ACA Requirements?

Insurance plans offered by employers have to meet two basic standards in order to be considered acceptable under the Affordable Care Act:

Affordability

To be “affordable,” the monthly premiums for an employee’s insurance must come to less than 9.5 percent of that person’s monthly household income. Let’s say you and your spouse each earn $2,000 per month, and let’s also say that your job covers you as the employee and your spouse as a family member. Multiply $4000 by .0966 and you get $386. If the portion of your monthly insurance premium that covers just you (not your spouse) is less than $386, then your plan is considered affordable. Even if you pay more than this amount to include your spouse, that doesn’t matter. Affordability is only judged by the cost of covering the employee.

Value

The second criterion that employer-based plans must meet involve how much of your medical bills are paid for. Your insurance must cover at least 60 percent of your medical costs, as long as you go to providers that are within the plan’s network. Of course a lot of fine print goes along with this, and the 40 percent that you pay will be partly in the form of a deductible and co-pays (sometimes called “coinsurance.”)

Subsidized Marketplace Plans Are Affordable

Individual Marketplace plans are affordable because of tax credits that subsidize a big chunk of your monthly premiums. 87 percent of people who bought individual plans in 2015 received these subsidies, and the average subsidy was $263 per month. If your employer’s insurance doesn’t meet minimum standards, you can purchase an individual plan with subsidized premiums based on your income. However, your employer will not contribute to your individual plan costs.

If you have any questions or want to explore your options, our licensed brokers will help you determine which insurance option is best for you & your family, your healthcare needs and budget. Call today for an appointment.

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