If Your Employer Offers Health Insurance Do You Have to Take it?

Jenifer Dorsey
July 18th, 2019 May 28th, 2019 |
Read time: 5 minutes
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Access to job-based health insurance may be desirable for some, but others may be tempted to explore their options outside the workplace. We’ll address the following kinds of questions below:

  • Under the Affordable Care Act (ACA), if your employer offers health insurance, do you have to take it?
  • Does your employer even have to offer health insurance to begin with?
  • Can your employer cancel your health insurance, provide you with a premium reimbursement and send you to HealthCare.gov or a state-based exchange?

These are just a few of the questions people have about job-based health insurance, especially as lawmakers modify the ACA. Let’s take a look at where things stand as of 2019.

Does your employer have to offer health insurance?

The employer shared responsibility provision requires certain employers to provide minimum essential coverage to full-time employees. Whether or not it applies to your workplace depends on how many people your workplace employs and the number of work hours those employees average.

As of 2015, companies with 50 or more full-time employees, including full-time equivalent employees, are required by the ACA to offer workers health insurance plans that provide minimum essential coverage or pay a tax penalty known as the employer shared responsibility payment.1

Learn more about the employer shared responsibility provision at IRS.gov.

Small business owners with 50 or fewer employees may not be obligated by law to provide group health insurance, but they can offer it through the federally facilitated Small Business Health Options Program marketplace or their state-based exchange SHOP marketplace.

Visit the SHOP marketplace at Healthcare.gov.

Do you have to take your employer’s health insurance?

Nothing says that if your employer offers health insurance you have to take it. However, if your motivation for waiving job-based coverage is enrolling in a subsidy-eligible policy through HealthCare.gov or a state-based exchange, then you may want to reconsider.

Why?

Under the ACA, you won’t be eligible for a subsidy if you have access to job-based health insurance that is both:2

  1. Considered “affordable” – costs 9.86% or less of your household income in 2019,3 and
  2. Meets the ACA’s minimum value for employer-sponsored health insurance – the health insurance policy both pays at least 60% of the total cost of medical services for a standard population and has benefits that include substantial coverage of physician and inpatient hospital services.4

Can your employer cancel your health insurance?

As stated above, the ACA requires employers of a certain size to provide access to ACA-compliant health insurance or face a tax penalty.5 So, yes, they could technically cancel your health insurance coverage, but it may not be in their best interest if the law requires them to provide access to it.

Your state also has laws regarding employer coverage. If you have questions or concerns regarding health insurance and your workplace, contact your company’s HR representative or your state’s department of labor.

Can your employer give you money to buy health insurance elsewhere?

Your employer can neither give you after-tax money to buy health insurance in the individual market, nor can they reimburse you for doing so.6 Such practices do not comply with the ACA.

Nothing prevents employers from providing employees with extra taxable income to buy health insurance; however, they cannot require employees to use it to purchase health insurance.

The materials available at this web site are for informational purposes only and not for the purpose of providing legal or tax advice. You should contact your attorney or tax professional to obtain advice with respect to any particular issue or problem.

What if you don’t have access to job-based benefits?

Nearly half of the non-elderly population has employer-sponsored health insurance.7 But what if you’re not among them and need to obtain coverage on your own?

Especially if you’re self-employed, unemployed or an independent contractor, you may want to investigate private ACA-compliant major medical insurance or a non-ACA insurance option like short term health insurance.

Major Medical Insurance: Is considered minimum essential coverage under the ACA. That means it complies with the ACA’s essential health benefits – a wide range of medical services from standard preventive care visits and screenings to hospitalization and chronic illness care. These plans are guaranteed issue, meaning you cannot be charged more or denied coverage due to a pre-existing condition or health history.

You may qualify for a subsidy or premium tax credit when you enroll in a major medical policy through the federal or state exchanges. However, this type of coverage is only available during the annual open enrollment period or when you qualify for a special enrollment period.

Learn more about major medical insurance and find out if it’s right for you.

Find out if you qualify for a special enrollment period for major medical insurance.

Short Term Medical Insurance: Is not ACA-qualifying coverage. These plans provide less coverage than major medical plans and their premiums reflect that as they are lower. Short term plans are intended to provide temporary coverage for unexpected illnesses and injuries that require a visit to the hospital while you’re between jobs and major medical plans. They’re not intended to be a long-term coverage solution.

You cannot get subsidies or tax credits for these types of plans and they’re not guaranteed issue. So you may be denied coverage or pay more if you have a pre-existing condition.

Short term health plans are available from 30 to 364-day terms depending on your state but they’re not available in all states. You can apply for short term health policies 365 days a year, and if you’re approved there is no waiting period; you can begin coverage the next day.

The best way to find out if these plans are available in your area and how much it might cost you is to get a quote.

(It just takes a minute to complete the request form and you’ll get your results immediately.)

Get a Short Term Health Insurance Quote

Need help deciding what health insurance is right for your situation? Call 888-855-6837 to speak with a licensed agent, or find a local agent.

Summary + Next Steps

Current laws require certain employers to offer access to group health insurance. They cannot use health reimbursement arrangements to send employees to the individual market. However, this could change in the future.

If you have questions about your employer’s health insurance offerings, contact your human resources personnel or the individual who administers your job-based benefits.

Learn more about individual major medical insurance.

Learn more about non-ACA health insurance for individuals and families.

Call 888-855-6837 to speak with one of our licensed agents.

The materials available at this web site are for informational purposes only and not for the purpose of providing legal or tax advice. You should contact your attorney or tax professional to obtain advice with respect to any particular issue or problem.

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Originally Published On May 28th, 2019
Independence American Insurance Company, Madison National Life Insurance Company, Inc. and/or Standard Security Life Insurance Company of New York may underwrite the products referenced on this website. Legal Disclaimers.

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