If I have access to health insurance, can my husband’s company deny me coverage?

January 15, 2013

Q: My husband works for a much larger company than I do. I have always been covered under his plan because it is more affordable than the one offered by my smaller company. We received a letter in the mail from his company stating that beginning in April if I had access to health insurance that I can no longer be covered under his insurance. Is this legal? I know it’s not good for my family. This will cost my family a great deal more money.

A: Yes, an employer can offer insurance to his employees, but not to their family members.

Your husband’s employer is basically saying that he doesn’t want to subsidize your employer (who isn’t paying anything toward your benefits or your children’s benefits.)

Meanwhile, your small employer has to pay more for insurance than a large employer because the administrative costs of selling insurance to small groups are much higher. When insurers sell to large companies, they enjoy economies of scale. In addition, insurers can charge small firms more if many of their employees are women (who tend to use more health care) or suffer from a pre-existing condition.

(By law, they cannot charge large companies more based on the gender or health status of employees.)

Typically, small employers pay 18 percent more for the same policy.

But in 2014, under the Affordable Care Act, your employer’s insurance may become less expensive. This is because small companies (with fewer than 100 full-time employees) will be able to purchase insurance for their employees in a health insurance exchange, or marketplace set up specifically for small companies. In these exchanges,  your employer will immediately become part of a large group, and so the rate he pays may well be lower. And insurers won’t be able to discriminate against small firms because many of their workers are women or have been labeled with “pre-existing condtiions.”

But, in the exchanges, insurers will have to cover all “essential benefits” and offer preventive care at no cost. (No co-pays and no deductible.) Out-of-pocket costs will be capped at $6,000 for an individual and $12,000 for a family, and deductibles will be capped at $2,000.

For these reasons, your employer may find that insurance in the exchange is more expensive than the policy he now offers. In that case, he might decide to stop offering insurance. But if he does that, and has at least 50 full-time employees, he may well end up having to pay a penalty.

See our post on the penalties for employers.

Read more FAQs about issues related to group health insurancehealth insurance exchanges, and health reform.

 


Tags: ACA, Affordable Care Act, employer-sponsored, employer-sponsored benefits, essential benefits, group health insurance, health insurance exchange, Obamacare, penalties

Search within questions

Related terms

Affordable Care Act (ACA)

The Patient Protection and Affordable Care Act (PPACA) – also known as the Affordable Care Act or ACA, and generally…

essential benefits

Beginning in 2014, under the Affordable Care Act, all health insurance policies sold in state health insurance exchanges and off exchange…

group health insurance

Coverage through an employer or other entity that covers all individuals in the group. Read more about group…

health insurance exchange

A health insurance exchange – also known as a health insurance marketplace – is a key provision of the Affordable Care…

Latest Obamacare news & opinion

Obamacare open enrollment window

Fixing Obamacare’s broken window

Spreading out open enrollment would allow carriers and exchanges to maintain level…

mexico-dental-services

The dental crisis that’s driving patients away

When increasing numbers of Americans cross the Mexican border to see a dentist ... you…

april-fools-health-wonk-review

Health Wonk Review for April 10, 2014

Billy Wynne put together a great edition of Health Wonk Review over at Healthcare…

exchanges too big to succeed

Exchanges: too big to succeed?

This is the time for brainstorming, but how much are we willing to change? Could we…

Republican policy fail ACA

Will there be an ‘exodus’ to the exchanges?

Harold: Now, would you be happy or sad if there was this exodus to the exchanges? Jon: I…

uninformed Florida Obamacare

Can Obamacare work even better?

I think the average American voter is actually a charitable person, a big-hearted person.…

medicaid-expansion-gruber

Reports of ACA demise: greatly exaggerated

For this edition of Curbside Consult, I Skyped with Dr. Jonathan Gruber, who is the Ford…

repeal Obamacare 2014

Obamacare: Irreplaceable, irrepealable

If you support the Affordable Care Act, know that your work is not yet done. And if you…

Health Wonk Review March Madness

Health Wonk Review for March 27, 2014

If you're one of those health policy diehards, definitely head over to the Health Affairs…

all posts

See all 365 blog posts.

Popular FAQs on Obamacare

Does the open enrollment extension work the same in every state?

I’ve heard the federal government pays for the Medicaid expansion, but only for a few years. Then the state is on the hook for costs?

Does extended open enrollment beyond March 31 apply to plans purchased outside of the exchange?

I will be retiring from my job in August and moving to a new state. Do I have to establish residency there before I can apply for ACA coverage?

I am a 21-year-old dependent living with my parents. I have no wife or kids, so do I apply for health insurance as a household of one and list only my own income? Or do I have to be on my parents’ insurance?

I heard risk pools are closing. I have a pre-existing condition and can’t afford to have a coverage gap. What should I do?

If I qualify for Medicaid, should I worry about the March 31 deadline for open enrollment?

I’ve heard that to qualify for an open enrollment extension, I need to begin my application by March 31. But what do they mean by that?

If I begin my application now but don’t complete it by March 31, will I still be able to get coverage this year?

all posts

See all 212 questions

You need to know:

The status of your state’s health insurance exchange

Obamacare
Penalty
Calculator

Will you
qualify for an Obamacare subsidy?

Should you
look outside
the ACA’s official exchanges?



Learn all about health insurance

health insurance exchanges

Know your health insurance exchanges

The ACA-created health insurance exchanges will be up and running in days, and while…

ACA Basic Health Program

Affordable Care Act’s Basic Health Program

Starting this year, the Basic Health Program, a provision of the Affordable Care Act,…

ACA owners manual

Getting the most from your new insurance

The media have focused on the cost of the monthly premium. How much would you contribute…

SHOP exchanges

How SHOP exchanges help small businesses

The unprecedented advantages offered by ACA's SHOP exchanges truly make the law a game…

avoiding scams in the aca marketplace

Avoid scams while shopping for insurance

The health insurance marketplaces (commonly referred to as exchanges) are set to open in…

cost-sharing subsidies

The ACA’s cost-sharing subsidies

While the Affordable Care Act's premium subsidies help pay the cost of the health…

Individual health insurance.

Individual health insurance

If you are self employed, or if your employer does not offer health insurance, you'll…

Will you owe an Obamacare Penalty?

Will you owe a penalty under Obamacare?

If, for whatever reason, you decide not to purchase coverage in 2014, you can use the…

Obamacare's essential benefits

Health reform’s 10 essential benefits

The ACA specifies ten benefits be included in all health insurance plans sold on each…

all posts

See all 41 articles