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Affordable Texas health insurance  Texas health reform   Group Coverage Concerns

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 insured.

So, What's Better - An Individual or Employer-Sponsored Plan?

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 insurance premium. 

Income Level

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 for 2014.

Contact Stateside to Discuss ACA Updates
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
Email: info@texasplans.com
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