Decades of Employer-Sponsored Coverage
Since World War II, employer-sponsored group coverage has been the holy grail for individuals seeking health insurance coverage for themselves, their spouse, and any dependents. Typically, group plans in this country have been rich in benefits and available under guaranteed issue – an applicant (the employee, his/her spouse, and/or their children) would not be declined for preexisting health reasons. As a way of attracting top talent to their ranks, employers subsidized employees’ coverage by paying most if not all of the premium. As a country, we’ve grown accustomed to this setup for decades.
Are ACA Individual Plans Now Equal to Employer-Sponsored Coverage?
With passage of the Affordable Care Act (ACA) in March 2010, broad benefits that once seemed reserved for full-time employees of thriving companies are now going to be available to individuals and their families through the healthcare marketplaces established by the ACA legislation. Plans made available as of January 1, 2014 under ACA will be available as guaranteed issue with no preexisting condition waiting period. This is true even if applicants currently do not have insurance, if they have a serious medical condition, or even if they are an expectant parent.
The first big change for Texas consumers will be the availability of comprehensive maternity benefits. Additionally, benefits related to the treatment of substance abuse and mental health conditions will also now be covered. Lastly, individual plans will offer comprehensive preventative care benefits to be paid by the carrier at 100% with no deductible applied.
Texas Consumers Can Qualify For Premium Subsidies
So, should you stay on your employer-provided plan, or should you pursue an individual plan option?
It comes down to the new subsidy program created under ACA.
Depending on an individual or family’s household income, a large amount of the monthly premium of an individual plan from the marketplaces will be paid by the federal government through an advanced tax credit. Subsidies to lower monthly premium cost will be available for individuals and families with incomes ranging from 100% to 400% of the federal poverty level (FPL).
But Wait – Your Spouse May Not Qualify for the Subsidy
Since the subsidy acts in the same manner as the amount paid by the employer under group coverage, the plan from the federally sponsored marketplaces become cost competitive with group coverage. However, the subsidy is only available if the employee has to pay more than 9.5% of the household income for their coverage as offered by the employer, or if the employer elects not to offer any group coverage.
It gets confusing quickly. There is a lot of simple and not-so-simple math involved, and we encourage you to contact Stateside to discuss your particular situation.
More About How the Subsidy Works
Let us dive a little deeper into how the subsidy works. According to ACA, low- and moderate-income workers who have access to employer-sponsored group coverage that is deemed unaffordable (or, too expensive) can elect to secure coverage for themselves, their dependents, and their spouses through the federal marketplaces and receive the subsidy to reduce overall premium cost.
But there is a catch when it comes to a spouse.
If the employer provides coverage for the employee with a premium rate not exceeding 9.5% of that person’s full household income, the employee is essentially locked into that employer’s offering – and is not eligible for tax subsidized coverage from the marketplace. Not only is the employee not eligible for the subsidy support, but the employee’s spouse is also not eligible for tax subsidized coverage.
The employee’s premium will typically be subsidized by the employer, but coverage for other members of the family becomes the responsibility of the employee. Imagine paying 10% or more of your household income for health insurance coverage, when better options might be out there.
If this sounds like your situation, you would be better off having all members of the family subject to the federal premium subsidy. But that is only possible if your employer does not offer you coverage with a premium that comes in at a rate of less than 9.5% of your household income. Employers who elect not to offer their employees group coverage will enable their employees to qualify for the premium subsidy.
STATESIDE CAN HELP!
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs.
Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
By using the Telephone Appointment System, clients can take advantage of scheduling a health insurance discussion when convenient for their schedule. During Open Enrollment phone appointment availability is expanded to include extended hours and weekends.