Getting Health Insurance Through Your Job

Americans who work full-time at companies with more than 50 employees are usually entitled to various types of employer-sponsored health care plans.

This is in addition to the private health care plans available through the Health Insurance Marketplace. To insure employees, employers usually purchase a group health insurance plan that can cover several employees at once.

Health insurance plans that are part of a group policy are subsidized by the employer so that the entire cost of the medical coverage does not fall completely onto the employees themselves. The primary differences between employer-sponsored health plans and individually purchased health plans are the amount of freedom an enrollee has to choose providers along with the overall out-of-pocket cost for the enrollee.

Group health plans purchased by employers are generally structured in the same way, from the perspective of the enrollee. For example, when shopping for private insurance in your state’s health care marketplace, several types of group insurance plans may be purchased by a business and offered to its employees. This includes Health Maintenance Organization (HMOs), Preferred Provider Organizations (PPOs), Exclusive Provider Organizations (EPOs), Point-of-Service (POS) Plans, High-Deductible Health Plans with or without a Health Savings Account (HDHPs/HSA) and sometimes Fee for Service (FFS) Plans. Each of these plans must meet all applicable Affordable Care Act (ACA) regulations in regards to affordability and coverage to be considered adequate health coverage.

Employers generally choose from health insurance plans they automatically subsidize and those based on reimbursement. Even if your employer offers employees several types of health insurance plans, every individual has the right to shop around for a private health insurance plan to use instead of the employer’s group health care scheme. Enrollees who opt out of employer-related health care plans for private insurance policies may lose access to some medical savings programs, however.

Payment Schemes Commonly Offered by Employers

In most cases, employers choose from two types of group health insurance plans to offer their employees: employer-subsidized health care and reimbursement plans. Most companies that buy group health insurance go for employer-subsidized plans that serve as umbrella policies for several employees. Although there have been talks of rising health care costs for both individuals and employers, recent research shows that while the cost for individual health plans has risen for millions of Americans, the average cost for individuals enrolled in an employer-sponsored health insurance plan has not risen much.

With these types of health insurance plans, the employer usually automatically withholds a portion of the employee’s paycheck to contribute toward medical costs while the rest of the insurance bill, usually about 50 percent, is covered by the employer.

Some employers who are worried about being able to afford an adequate group health care plan or who would like their employees to have the most freedom possible when choosing a health care plan opt for reimbursement plans. Instead of buying a group policy, employers can set a fixed amount to put toward the health care costs of each employee. These funds will be provided to the employee to offset the total costs of whatever private healthcare plan the employee chooses to purchase on their own.

This option is convenient for companies and employees who live in areas that offer several options for health care at affordable rates or for companies that prefer to make additional contributions to employees over managing an entire health care plan themselves.

Affordable Care Act (ACA) Guidelines for Employer Health Insurance Plans

All employer health care programs must meet basic ACA requirements for minimum value and affordability. Health care plans that do not meet these minimum standards do not count as adequate insurance. While the complete list of ACA regulations is long and detailed, a few essential guidelines are worth pointing out. Make sure whatever employer-related health plan you are considering meets the basic criteria outlined below.

Affordability

ACA guidelines are meant to protect enrollees from being taken advantage of by companies that offer unnecessarily expensive health insurance plans but do not provide enrollees with significantly better health care coverage. In real terms, this means that a job-based plan should require that an employee spend no more than 9.56 percent of his or her household income on health insurance.

It is important to note that this percentage takes into account the total household income of the employee, which includes all individuals you normally claim on your tax returns. If a household with a total income of $49,000 annually, for example, was offered an employer-based health insurance plan that cost $300 per month, it would be considered affordable under ACA regulations because it is less than 9.56 percent of the household’s monthly income ($390).

Minimum Value

To make sure that all employer-related plans provide enrollees with the minimum amount of coverage considered adequate by the ACA, employer-related insurance plans must meet additional criteria concerning coverage amounts. In effect, ACA minimum value regulations state that an adequate health insurance plan must pay at least 60 percent of the total cost for medical services of the company’s standard population. In addition, employer-related health plans must provide substantial coverage for general doctor and hospital services, especially preventative care visits.

Regular Communication

Whether your employer has already offered employees some form of employer-related health insurance or is offering it for the first time, ACA regulations also dictate the minimum amount of communication required between you and your employer. Your employer is required to let you know about any changes to our health insurance plan at least 30 days before said changes occur. If the employer-related plan does not mean other minimum ACA standards, they have to let employees clearly know about this in writing. If your employer’s health plan options have barely changed in form or price since March 23, 2010, they may have been “grandfathered,” or allowed to maintain their past structure in lieu of new ACA requirements.

Opting for a Marketplace Plan Instead of Employer Health Insurance

While you are free to turn down your employer’s offer for subsidized or reimbursed health insurance, you may end up losing some money and may not be able to find affordable health insurance on your own. If it is deemed that the plan that your insurance offers you is adequate by ACA standards, particularly in that it meets minimum value and affordability standards, you may lose access to savings programs and tax discounts that you might have been eligible for, like the popular premium tax credit often used when purchasing a private insurance plan through your state marketplace. Since you have the right to freely choose your own health insurance plan, your employer is not permitted to punish you for deciding to go with a private plan instead of the group insurance plan offered by the company.

If you want to cancel a health insurance plan that you purchased in lieu of employer-based insurance without having another health insurance option already in mind, you could face increased premium costs when purchasing your next plan if you have gone a long enough period without health care coverage. You must also check with your employer to see if you are eligible to enroll in your employer’s health coverage at any time or if you must wait for a special enrollment period.

To avoid going without coverage, you may have to wait to switch plans. If you are searching for a job-related plan because your financial assistance for your private health insurance plan purchased through the marketplace is no longer available, most insurance providers will grant you a special enrollment period to submit a new application.

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