Think Twice Before
Automatically Accepting Group Coverage
Historically, employer-sponsored group
coverage has been the holy grail for individuals seeking health insurance
coverage. You get a new job, your employer offers great healthcare options,
you share the cost, and your family can sleep easy at night knowing they'll
be taken care of. It hasn't always been that way.
The Advent of Group Coverage
Group coverage provided by employers has
been an accepted benefit since World War II. At that time, wages were
frozen in support of the war effort, but generous benefits such as health
insurance were exempt from restrictions and not subject to income tax. So,
as you can imagine, employers began offering enticing insurance options to
lure, hire, or keep great employees.
Now, over fifty years later, what's
changing? With passage of the Affordable Care Act (ACA) in March 2010,
benefits previously only available within the employer-sponsored group
market will soon be available to individual consumers.
What's Changing Now
You no longer need to seek the holy grail
of an employer-sponsored plan in order to have rich benefits at a subsidized
cost with guaranteed issue (meaning you cannot be turned away for
preexisting conditions or other concerns). Everyone
is eligible for coverage - even if you do not currently have insurance,
have a serious medical condition, or are an expectant parent.
Benefits available for individuals will
look very similar to plans previously available under employer-sponsored
group plans. The first big change for Texas consumers will be that
comprehensive maternity benefits will be available. Benefits related to
the treatment of
substance abuse and mental health conditions will now be covered under
individual plans. Another major change in individual plans available from
the newly-created marketplaces will be the availability of comprehensive
preventative care benefits to be paid by the carrier at 100% with no
deductible applied. It is anticipated that plans available from the
marketplace will have lower deductibles than have been available in the
past, which will limit the amount of out-of-pocket expenses paid by the
So, What's Better - An Individual or
Beginning on January 1, 2014, individual
plans will compete very favorably against plans offered by Texas employers.
However, the ability to receive a
federal tax subsidy to offset the premium cost is by far the single most
significant change. Depending on an individual or family's household
income, a large amount of the monthly premium will be paid by the federal
government through the advanced tax credit.
Who Receives the Subsidy?
Subsidies will be available according to
ACA for individuals and families with incomes ranging from 100% to 400% of
the federal poverty level (FPL). The following is a list of FPL percentages
and the percentage of income that the policyholder will pay for health
Annual Premium Not To Exceed
Percentage of Income
Up to 133% FPL
2% of income
133 to 150% FPL
3 to 4% of income
150% to 200% FPL
4 to 6.3% of income
200 to 250% FPL
6.3% to 8.05% of income
250 to 300% of FPL
8.05% to 9.5% of income
300% to 400% FPL
9.5% of income
To learn more about the subsidy, click here.
Instead of an employer subsidizing your
health insurance coverage, in this scenario the government is subsidizing
it. Ultimately, the two options become very similar, or cost competitive.
Wait - An Employer's Actions Can Impact
Whether You Receive the Subsidy?
Here's why you may want to forgo employer
sponsored group coverage: the subsidy is only available from the government
if an employee has to pay more than 9.5% of their household income for the
coverage offered by the employer. You may want to read that sentence twice.
It's a new, fairly confusing rule.
According to ACA, low- and moderate-income
workers that have access to employer-sponsored group coverage that is deemed
unaffordable (at more than 9.5% of their household income) can elect instead
to secure coverage through the federal marketplace and receive the subsidy
to reduce overall premium cost. In other words, the government wants to
ensure that you aren't bound to your employer-offered plan if it is indeed
too expensive for you and your family.
Let's think back to group-sponsored
coverage. Oftentimes, the employee's premium is subsidized by the employer,
but coverage for other members of the family is not. It can get expensive
pretty quickly. If you take out your pay stubs and do the math, you may
find that you are spending more than 9.5% of your income on your
employer-sponsored plan. If you fall into that category, it's very likely
you would be better off accessing coverage through the federal marketplace
and qualify for the premium subsidy. It's a numbers game, and we can help
you figure out what makes the most sense for your family - now, and in 2014
when these changes are in full swing.
Talk to Your HR Team
Employers who elect not to offer their
employees group coverage will enable their employees to qualify for the
premium subsidy. And if they employ less than 50 full time equivalents,
then no fine will be assessed for not offering coverage. For larger
employers who choose not to offer health insurance plans, there is a fine of
$2,000 after the first 30 employees beginning in 2015.
You've always thought your job should
offer you good benefits, right? Things may be changing. Take this article
to your Human Resources team and discuss the options available to all of you
Contact Stateside to Discuss ACA
The Affordable Care Act open enrollment period begins October 1, 2013.
Do you understand what that means for you and your family in terms of
insurance coverage for the remainder of 2013, and into 2014? Call us anytime
to learn more.
You can contact Stateside Insurance Services in whichever way is most
convenient for you:
Toll Free: (866) 444-3332
Austin Local: (512) 542-9760
Toll Free Fax: (800) 349-2730
Run your free and instant
Texas Health Quote