- You could get affordable ACA-compliant coverage if you work for a small business that doesn’t offer health benefits
- If you work part-time – or as a contractor – you may need to create your own ‘benefits package’
- An employer who doesn’t offer health benefits could use a QSEHRA or ICHRA to help with your individual health insurance premiums
- If you don’t have a qualifying event, you’ll need to enroll in individual-market coverage during the ACA open enrollment period
The majority of Americans under the age of 65 get their health insurance from an employer. But not all employers offer group health coverage. So even if you’re not self-employed, there are a variety of reasons you may need to obtain your own health coverage in the individual/family market.
Fortunately, there are solutions available, and you might be surprised at how affordable and robust they are. Here are some common scenarios in which you wouldn’t have access to employer-sponsored insurance – and suggestions for how you can still get affordable, comprehensive health insurance.
You work for a small business that doesn’t offer health benefits
Although the Affordable Care Act (ACA) requires large employers to offer health coverage, there is no requirement that businesses with fewer than 50 employees offer coverage to their workers. Many do anyway, but nearly half of all businesses with 3 to 49 workers do not offer health benefits. (There’s significant variation across that spectrum. Employers with five workers are far less likely to offer health benefits than employers with 45 workers.)
So what can you do if you work for a small business that doesn’t offer health benefits? You’ll essentially need to create your own “benefits package.” The good news is that you’ll be able to customize it to fit your family’s needs and budget.
We have an overview of how to choose the best health plan for your circumstances. And here’s a summary of some important points to keep in mind as you shop for your own health coverage:
- Premium subsidies could make your individual health insurance very affordable. In the individual market for comprehensive health insurance, premium tax credits (premium subsidies) established by the Affordable Care Act might pay a substantial portion of the monthly cost of the health plan. Depending on your income and the plan you select, it’s possible that the subsidies might cover the full cost. And the subsidies are larger and more widely available than they used to be, thanks to the American Rescue Plan (ARP). You can use our subsidy calculator to get an idea of how much your subsidy could be, and read our summary of the improved affordability of health coverage as a result of the ARP.
- Silver plans can further reduce your insurance costs. Pay particular attention to Silver plans if your household’s income isn’t more than 250% of the poverty level (that’s $65,500 for a family of four). Income-based cost-sharing reductions will make your coverage more robust, but they’re only available if you choose a Silver plan. Cost-sharing reductions are particularly strong at incomes up to 200% FPL – and Silver plans are now available free at incomes up to 150% FPL and at much lower cost than previously at incomes above that level.
- You can use a health savings account. If you’re interested in contributing to a health savings account, you’ll need to purchase an HSA-qualified high-deductible health plan.
- Consider your provider network when you compare plans. If it’s important to you to have specific doctors in the plan’s network, or specific medications covered by the plan, pay close attention to the provider network and the formulary (covered drug list) of any plan you’re considering. These vary considerably from one plan to another. The federal health insurance marketplace, HealthCare.gov, and most of the 15 state-based marketplaces allow you to check which plans specific doctors and hospitals accept.
- You can buy additional coverage. If you want additional coverage beyond major medical, you can read more about purchasing supplemental benefits.
- Medicaid or CHIP might be available. Depending on your household’s income and where you live, Medicaid and/or CHIP might be available for at least some members of your household. These programs provide free or low-cost coverage with comprehensive benefits and low out-of-pocket costs.
- The coverage gap is a problem in some states, but you might be able to avoid it. If your household’s income is low and you’re in one of the 11 states where there’s still a coverage gap, be sure you’ve read this article about avoiding the coverage gap.
Although working for a small business is a common reason people need to purchase their own coverage, there are other employment situations that don’t come with an offer of employer-sponsored group health benefits. So all of the above points will also be important to keep in mind if your situation more closely matches one of the following scenarios, since you’ll still be needing to purchase your own coverage.
You work part-time – or as a contractor – and don’t qualify for benefits
Even though you might be working alongside co-workers who qualify for health benefits, your own employment situation might be different.
If you work fewer than 30 hours per week, your employer may not offer you health benefits, regardless of how large the business is. If you’re a seasonal worker, you might not qualify for health benefits. And if you’re a contractor rather than an employee, the company is not required to offer you health coverage (although there are rules in place to prevent employers from misclassifying employees as independent contractors).
If any of these situations apply and you’re not eligible for the group health plan that your employer provides, you’ll need to create your own benefits package, just like someone who is self-employed or someone who works for a small business that doesn’t offer health coverage at all.
Your employer reimburses premiums for self-purchased coverage
If your employer is offering a QSEHRA or ICHRA, it means that they will reimburse you a certain amount of money each month to cover some or all of the cost of a self-purchased health insurance plan. This means that you can select from among any available plan in your area, but still get the benefit of an employer’s contribution toward the cost.
If you’re offered a QSEHRA, you may also be eligible for premium tax credits in the exchange, although the amount of the tax credit would be reduced by the amount that your employer contributes.
If you’re offered an ICHRA and you accept it, you won’t be eligible for a premium tax credit. But if the ICHRA benefit isn’t substantial enough to make the self-purchased coverage be considered affordable, you can reject the ICHRA and apply for a premium tax credit instead.
With either reimbursement option, you can choose the level of coverage you want, and apply your health reimbursement amount to the cost. If you’re happy with a low-cost plan, you may end up paying very little in premiums after your employer’s contribution. On the other hand, you might decide to pick a more robust plan and pay the extra premium yourself.
One other point to keep in mind: If your employer offers an ICHRA that will pay some, but not all, of the cost of an individual-market plan, they may allow you to use a pre-tax salary reduction to cover the portion of the premium that you’ll have to pay yourself. But this is only available if you buy your plan outside the exchange. Since premium subsidies aren’t available if you’re receiving an ICHRA benefit, there’s no downside to shopping off-exchange, and it will be necessary in order to take advantage of any pre-tax salary reduction approach to paying your share of the premium.
(Note that pre-tax salary reductions for the employee’s portion of the premiums aren’t available in conjunction with QSEHRAs, regardless of how the health plan is purchased).
If you don’t have a qualifying event, you’ll need to buy an ACA health plan during open enrollment
If your employer doesn’t offer coverage and you don’t have a recent or imminent qualifying life event, you’ll likely need to wait until open enrollment to sign up for your own health coverage. But that’s just around the corner; it starts nationwide on November 1, for coverage that will take effect January 1.
And there are some states where a COVID-related enrollment window is still ongoing, which would allow you to sign up for a plan even sooner, with coverage taking effect this fall.
Most of the American Rescue Plan’s subsidy enhancements will still be in effect for 2022, so plans selected during open enrollment will continue to be more affordable than the coverage that was available in previous years. So if your employer doesn’t offer coverage and you’ve been uninsured or relying on a plan that’s not ACA-compliant, open enrollment is your opportunity to upgrade your coverage — and it might be much more affordable than you thought it would be.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health marketplace updates are regularly cited by media who cover health reform and by other health insurance experts.