What Do You Do About Covering Your
Spouse through Your Plan?
Decades of Employer-Sponsored Coverage
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
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 beginning on 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
The first big change for Texas consumers
the availability of comprehensive maternity benefits. 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
Texas Consumers Can Qualify For Premium
Beginning on January 1, 2014, individual
plans will compare very favorably to plans offered by Texas employers. 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 the 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's 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's 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
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's 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
Feeling confused? It's a lot to digest.
Call us, and we can give you tips on how to talk to your boss or HR team
about what they plan - or don't plan - to offer you and your colleagues in
the realm of healthcare for 2014 and beyond.
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