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My employer offers insurance, but I think it’s too expensive. Can I apply for a subsidy to help me buy my own insurance?

Exchanges weren't meant to replace employer-sponsored coverage; they were designed for folks who are self-employed, unemployed, or work for a company that doesn’t offer health benefits. | Image: rocketclips / stock.adobe.com

Exchanges weren't meant to replace employer-sponsored coverage; they were designed for folks who are self-employed, unemployed, or work for a company that doesn’t offer health benefits. | Image: rocketclips / stock.adobe.com

My employer offers insurance, but I think it’s too expensive. Can I apply for a subsidy to help me buy my own insurance?

Q. My employer offers insurance, but I think it’s too expensive. Can I apply for a subsidy to help me buy my own insurance?

A. Probably not. If your employer’s insurance is considered affordable and provides minimum value (ie, is comprehensive), you are not eligible for a government subsidy to help buy a policy in the exchanges.

You could still buy a health insurance plan in the exchange, but you’d have to pay full price for it, so it is unlikely that you would get better and less expensive coverage in the exchange. And it’s also important to note that the plan your employer offers will almost certainly let you pay your share of the premiums on a pre-tax basis, while that’s much less likely if you buy your own plan.

To be clear, there’s nothing preventing you from declining your employer’s insurance and buying an individual-market plan, on or off-exchange. But in most cases, you won’t be eligible for a subsidy in the exchange, which means you’d be paying full price for an individual-market plan. The plan your employer offers is funded partly by your employer, and you’ll lose that benefit if you opt for an individual market plan.

You’ll also likely lose the benefit of paying for premiums on a pre-tax basis. (You can deduct total medical expenses, including self-purchased health insurance, that exceed 7.5% of your income, but only if you itemize your deductions. Self-employed people can deduct the full cost of self-purchased health insurance, but not if they’re eligible for coverage under an employer-sponsored plan, regardless of the cost.)

If you do want to enroll in an individual market plan, the open enrollment period to buy coverage runs from November 1 to January 15 in most states, although some states have different deadlines. Outside of the open enrollment period, you’ll need to qualify for a special enrollment period in order to sign up for individual/family coverage.

How are affordability and minimum value determined?

In 2022, an employer’s policy is considered affordable if individual coverage (for just you – not including your family) costs less than 9.61% of your 2022 household income (the Build Back Better Act would reset this threshold to 8.5%, but that legislation has stalled in the Senate after passing the House in November 2021; lawmakers are likely to consider various parts of it on a piecemeal basis in 2022). Household income is Modified Adjusted Gross Income as defined by the ACA.

It’s important to note that the affordability test for employer-sponsored coverage applies only to the amount you’d have to pay to insure just yourself under your employer’s plan. If that amount is less than 9.61% of your 2022 household income, you’re not eligible for a premium subsidy in the exchange, and neither are your family members if they’re allowed to enroll in your employer’s plan, regardless of how much it would cost to actually enroll them in your employer’s plan. This is known as the ACA’s “family glitch,” and although some lawmakers — and countless consumer advocates — have proposed fixes, it’s still an issue for several million Americans. Although the House’s versions of the Build Back Better Act calls for the affordability threshold to be reduced to 8.5% of household income, the determination would continue to be based on employee-only coverage, without accounting for the cost to add family members (and again, we don’t know what aspects of the BBBA, if any, will eventually be enacted).

Your coverage is deemed to provide “minimum value” if it pays for at least 60% of covered benefits for the average population (ie, is comparable to a Bronze plan in the individual or small group market) and provides “substantial” coverage for inpatient and physician care.

The employer-sponsored insurance offered at most large companies fits these definitions of providing “minimum value” and being “affordable.” Even prior to 2014, the vast majority of large companies already provided comprehensive health insurance, often covering most of the ten essential benefits that the ACA now requires of individual and small-group plans (large group plans are not required to provide coverage for essential health benefits, but most do).

Subsidy eligibility is also based on income

It’s unusual for an employer-sponsored plan to be considered unaffordable or to fail to provide minimum value. And large group plans that fail to meet these standards are subject to the ACA’s employer mandate penalty. But as noted above, the family glitch means that some plans that are considered affordable are not actually affordable for family members.

But even if you’re eligible for a subsidy based on the coverage provided by your employer, you still have to qualify based on your household income (Modified Adjusted Gross Income, which is ACA-specific).

There’s normally an income limit equal to 400% of the federal poverty level, but the American Rescue Plan (enacted in March 2021) eliminated that income cap for 2021 and 2022. Households that are otherwise eligible for a premium subsidy can get one regardless of income, if the benchmark plan would cost more than 8.5% of the household’s income. The House’s version of the Build Back Better Act called for extending this provision through 2025.

Split family onto two plans?

If you’re covering your whole family on your employer’s plan, it’s worth finding out how much it would be to insure just yourself under your employer’s plan. If your employer subsidizes the cost of premiums for employees but not for dependents and spouses, it’s possible that the cost to cover your whole family would be lower if you split the family onto two plans, using an individual market plan for your family members and your employer-sponsored plan for yourself.

As noted above, your family members would not qualify for subsidies in the exchange (assuming your own coverage from your employer isn’t more than 9.61% of your household income in 2022), so you’d be comparing full-price exchange (or off-exchange) plans with the cost to cover your family on your employer’s plan. And as noted above, you’d almost certainly need to compare the after-tax cost of the employer-sponsored plan with the post-tax cost of the individual market plan.

Be sure to also consider the out-of-pocket costs on both options before you make a decision, and keep in mind that family deductibles and family out-of-pocket maximums only apply to all family members on a single plan; if your family is on two plans, each plan would have its own out-of-pocket limit.

Exchanges aren’t meant to replace employer-sponsored coverage

The exchanges were designed for folks who are self-employed, unemployed, or work for a company that doesn’t offer health benefits. Prior to the ACA’s premium subsidies, which are only available through the exchange, these individuals had no choice but to pay the full cost of their health insurance premiums themselves.

Now that the exchanges are in place, people who would otherwise have had to pay full price for their own coverage can get relief in the form of premium subsidies, depending on their household income. They can also get cost-sharing subsidies, if their income doesn’t exceed 250% of the poverty level. And adults under the age of 65 whose household income is between zero and 138% of the poverty level are eligible for Medicaid if they’re in one of the states that have expanded Medicaid.

Since you have benefits at work, your employer is already subsidizing your insurance. On average employers that offer health insurance pay 83% of the cost of employees’ coverage and 73% of premiums for family coverage, asking workers to pay just 17% or 27%, respectively (it varies considerably from one employer to another, however, and smaller firms are more likely to require employees to pay a significant portion of the cost to add family members to the plan; as noted above, the family glitch means that family members aren’t eligible for premium subsidies even if the employer covers none of the family members’ premium costs).  

It is true that co-pays and deductibles have been rising, but that is because the underlying cost of health care has been climbing as hospital charges, specialists’ fees, and prices for drugs and medical devices rise. Your employer is likely still paying a significant share of the cost of your health insurance, and you’re receiving that as a pre-tax benefit.

And again, the pre-tax aspect of employer-sponsored coverage is a particularly important point. People who buy individual market health insurance can only deduct their premiums if they’re self-employed (and don’t have access to employer-sponsored insurance, which would eliminate the people we’re describing in this article) or if their total medical costs (including premiums) amount to more than 7.5% of their income, with only the portion above that level being eligible for the tax deduction.

But employer-sponsored health benefits are nearly always provided on a pre-tax basis: The portion that the employer pays is not included in the employee’s income, and the portion that the employee pays is taken out of their check pre-tax. The ACA’s premium tax credit for individual market enrollees helps to level this playing field a bit.


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 exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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Anonymous
Anonymous
1 year ago

“Since you have benefits at work, your employer is already subsidizing your insurance.” This is a blanket statement that is not necessarily true. A lot of companies these days offer plans where they only pay a small portion for employees and pay NOTHING for spouses or dependents. Then they add high deductibles on top of that and like us, you calculate your out of pocket for the year and realize you’ve spent the same if not MORE than your premiums out out-of-pocket because things like labs/diagnostics, or out-of-network providers covered at a lower percentage (which is frequent in rural areas where you have to leave town to get the care you require – for me it’s my annual post-op appointment 90 miles away in the city where the surgery was done where I have to pay over $600 OOP because he’s not in the local BCBS network). So not all employer-based insurance is subsidized. We’re paying full premiums for me and with the pandemic now, are considering dropping coverage because we’ve literally gotten nothing from the plan beyond discounted prescriptions. After a doctor-recommended breast ultrasound cost me $400+ and even the most basic thyroid lab costs $100 per test (that they require you re-take in 3 months if they change your dose), we’ve had to make the decisions to stop care because my coverage as a spouse is not subsidized and we’re literally getting nothing for the premiums we pay.

Louise Norris
Louise Norris
1 year ago
Reply to  Anonymous

Sorry if that sentence wasn’t clear — it was in reply to the original question, in which the person’s *own employer* offers coverage (as opposed to being a spouse or dependent on someone else’s plan).
The scenario you’re describing, in which the employer pays no portion of the premiums for a spouse and/or dependents and yet subsidies still aren’t available for them, is called the “family glitch.” It’s described further up in this article, and more information is available here: https://www.healthinsurance.org/obamacare/no-family-left-behind-by-obamacare/
I’m sorry your coverage is proving to be inadequate. Although it’s likely that your spouse (the employee) is receiving coverage that’s considered affordable and provides minimum value, you’ll want to double-check that to make sure that you’re definitely not eligible for subsidies in the individual market. This is the form that the employer can complete for that purpose: https://www.healthcare.gov/downloads/employer-coverage-tool.pdf

Anonymous
Anonymous
1 year ago
Reply to  Anonymous

Very true. At my firm, staff members get fairy well subsidized care, staff attorneys get less subsidies, and partner attorneys get zero subsidies. Full price family plan with a $17K deductible = $1900 a month.

Fakeblond
Fakeblond
1 year ago
Reply to  Anonymous

No, It’s not true at all. And it really ticks me off. We cant’ spend half of my husband’s wages on insurance that covers nothing. I have several medical issues, and it is expensive. And then free healthcare is being given to illegals! Screw Obama. SMH.

Louise Norris
Editor
1 year ago
Reply to  Fakeblond

Not sure what part you think isn’t true? But one additional point: Undocumented immigrants are not eligible for premium subsidies, and cannot enroll in marketplace coverage at all, even if they’re willing to pay full-price premiums. They are also not eligible for Medicaid, with very few exceptions (in most cases, even legally present immigrants are not eligible for Medicaid until they’ve been in the US for at least five years).

Angie
Angie
8 months ago
Reply to  Louise Norris

Not true… Who do you think is paying for all the clinic and ER visit that illegals go to. We do.

It’s now 9/2021, and without a doubt Obama Care has harmed America’s health care system and cause sky rocketing insurance cost. Premiums and deductibles are OUTRAGEOUSLY high for those who work. While those who don’t contribute to society (drug users, couch potatos, professional bottom feeders who know how to work the system) recieve TOTALLY free health insurance.

My husband and I work in a small school district (clerical & maintenance). Before Obama care we had excellent coverage (we don’t make much, but the good benefits were the offset to that). Now our “Golden Insurance’ is gone.

The replacement insurance isn’t affordable. So yes.. we sat down and talk with a representative with the NY State Health Exchange & we did end up qualifying. That was 4 years ago. We are very happy with coverage. Premiums and deductibles are very responsible with no office visit copay.

DO NOT LISTEN TO THIS ARTICLE! FIND OUT FOR YOURSELF IF YOU QUALIFY FOR A BETTER AND MORE AFFORDABLE INSURANCE by having a consultation with a trained rep. They are the only ones who can tell you yes or no. Once signed up renewals are simple. They automatically look at your tax returns and notify you by e-mail what your monthly premiums will be. Please… don’t base your eligibility from the info giving in this article. If I didn’t already have my coverage and read this, I would have automatically assumed that I was stuck with my school health insurance. We told our rep that after paying for insurance, the deductibles, $50.00 office visit, horrible prescription coverage, useless union dues, unwanted state pension contributions (they force us to have it even if you prefer to skip it) and the taxes we had very little money left over for monthly necessities. She asked some questions and looked at our paystubs.. and said soon after “Your current insurance is a financial strain… For that reason you qualify for for some level of insurance through the Heath Exchange. I’m not sure what your coverage it will be, but it will be better then what you have.”

Please, check for yourself.

Louise Norris
Editor
7 months ago
Reply to  Angie

I’m not sure what part of the article you think is untrue, but I can assure you it’s entirely factual. The IRS rules for premium tax credit eligibility are the same nationwide, and the tax credits have to be reconciled on Form 8962 each year (2020 was an exception to that, as excess premium tax credits did not have to be repaid, thanks to the American Rescue Plan).

The rules for determining whether an employer-sponsored plan is affordable are very clear-cut, and there is no grey area. In 2021, if the cost for just the employee’s coverage (not counting the cost to add family members) is more than 9.83% of the household’s income, the coverage is considered unaffordable for all household members who are eligible to enroll in the plan. But if the cost for just the employee is under 9.83% of the household’s income, the employer-sponsored coverage is considered affordable for everyone in the household, and premium tax credits are not available.

The other test is whether the employer-sponsored plan provides minimum value. This means the plan has to cover at least 60% of costs for a standard population, and include “substantial” coverage for inpatient and physician services. So a “mini-med” plan that only covers office visits and preventive care, for example, would not be providing minimum value. If that’s the plan that’s offered, the employee and their family members could potentially be approved for premium tax credits in the marketplace.

But if the employer-sponsored plan is officially considered affordable and provides minimum value, premium tax credits are not legally available. There are no legitimate ways around these rules, and expenses such as union dues and pension contributions are not taken into consideration. If a marketplace representative is telling you otherwise, they are not being truthful. This may or may not be found out by the IRS, depending on the circumstances.

Anonymous
Anonymous
4 months ago
Reply to  Angie

Well you are lucky to live in NY State. We don’t have the sand option in the South, from what I have seen. And I have talked to several people. It’s so discouraging.

Joe
Joe
3 months ago
Reply to  Louise Norris

That isn’t actually true. If an illegal entry is made aka coming in without permission virtually all of them declare persecution and say they are asylum seekers. If granted asylum status they sure can get on the FFM. For example if you are from Cuba it’s automatic. Mexico isn’t as easy, but many are granted asylum from other countries so what you say simply isn’t correct. You can argue that if they are given asylum status then they aren’t undocumented but they are all coached to claim asylum.

Louise Norris
Editor
3 months ago
Reply to  Joe

By definition, a person who is granted asylum or refugee status is not undocumented. Seeking status as an asylee or refugee does not automatically grant a person that status.

Mike
Mike
6 months ago
Reply to  Fakeblond

Not to turn the discussion political, but the reason for such a large gap in subsidy was not by design but instead a concession forced into the law from opposition and obstructionism in congress.

Ryan C
Ryan C
1 year ago

My employer’s insurance is considered to meet the minimum value, even though it doesn’t. It is a no network plan where they agree to only pay up to what Medicare will pay. In return, I am stuck with balance billing because no doctor or hospital within 100 miles of me will accept my insurance as payment in full. I believe my employer weighed the cost of getting insurance versus the penalty and paid for whichever was cheapest.
I shopped around for an operation I need, and the cheapest is still 80% of my yearly pay plus having to pay for premiums that are 9% of my pay. Shopping on the marketplace, I was at least able to get insurance and a price that’s just 35% of my yearly pay with premiums. If I could get subsidies that would drop to about 10%.

Josh
Josh
6 months ago
Reply to  Ryan C

I’m in a similar type boat. My employers coverage is seen as “affordable” in that it costs 14% of my household income to cover my family yet there is no in network coverage within 100 miles of me. So they flat out do not take my insurance and I have to pay out of pocket to then send the bills to my insurance for reimbursement that they will probably deny until the end of time. So I get to pay $1100/m for coverage I cannot use but also cannot get subsidies on the market place because my employer offers “affordable” coverage that is not accepted in my state because its a provider on the other side of the country.

Mary
Mary
1 year ago

Thank you for this article! With this job I will end up paying more than $12k annually for family premium. My question is, if I decide to decline my employer’s health insurance because the family premium is too expensive and I decide to pay full price for private because it’s cheaper, am I getting a tax penalty?

Louise Norris
Editor
1 year ago
Reply to  Mary

There’s no tax penalty involved in that, but you would be missing out on the tax break that goes along with employer-sponsored health insurance. When you’re enrolled in an employer’s plan, the premiums are (in almost all cases) paid pre-tax. That means you don’t pay income taxes on the portion that your employer pays on your behalf, and you also don’t pay income taxes (or Medicare/Social Security taxes) on the portion of the premiums that you pay yourself.
When you buy your own health insurance and have to pay full price, you can only deduct your premiums if you’re self-employed (not the case for you) or if you itemize your deductions and your total medical expenses, including premiums, amount to more than 7.5% of your income. In that case, you can deduct the medical expenses above that threshold. Here’s more about how that all works: https://www.healthinsurance.org/faqs/can-i-deduct-my-exchange-premiums-when-i-file-taxes-next-year/

Abby
Abby
1 year ago

I work in an office with 6 employees that is open 32 hours a week. My previous employer, who sold his practice, offered a $200 stipend to use towards a marketplace plan. My new employer now offers insurance and wants to use the stipend to pay “his portion” of premiums.
If I go on the office plan my premium would be $1000/month premium verses $476. My question, how many hours are considered full/part time in order to qualify for marketplace plans? I read somewhere 30 hours or less per week but cannot confirm? If that is correct the smart thing for me is to work 2 hours less per week.

Louise Norris
Editor
1 year ago
Reply to  Abby

It doesn’t matter as far as the marketplace is concerned. The employer mandate requires large employers (50+ employees) to offer coverage to all full-time employees, and full-time is defined as 30+ hours per week. But a business of just six employees is not required to offer coverage, so none of that applies in this case.
The crux of it will be whether or not your premiums (for just yourself, not including the cost of adding any family members to your plan) amount to more than 9.83% of your household income this year. If they do, then you’d be eligible for a premium subsidy in the marketplace. If they do not, you wouldn’t.
And if your own premiums meet that affordability test (ie, no more than 9.83% of your household income), that would, unfortunately, prevent anyone else in your family from qualifying for a premium subsidy too, assuming they’re eligible to be covered under the employer’s plan. This is known as the “family glitch,” explained in more detail here: https://www.healthinsurance.org/obamacare/no-family-left-behind-by-obamacare/

Anon
Anon
1 year ago

Does a person qualify for full tax credits on the ACA if their employeer offers health insurance but contributes no money towards the preiums?

Louise Norris
Editor
1 year ago
Reply to  Anon

It depends on the actual cost of the health coverage relative to the employee’s household income.
Employer-sponsored coverage is considered affordable (and thus disqualifies a person from receiving premium subsidies in the marketplace) if the employee’s cost for employee-only coverage is no more than 9.83% of the employee’s household income in 2021. Unfortunately, the “family glitch” means that the employee’s family members are also ineligible for premium subsidies if the employee’s coverage is considered affordable (assuming the family members are eligible for coverage under the employer’s plan, even if the employer does not pay anything towards the cost of their coverage. Here’s more about that: https://www.healthinsurance.org/obamacare/no-family-left-behind-by-obamacare/

Sharon P
Sharon P
1 year ago

Does employer heath insurance have to offer surgical in all their plans. I found out today that even a byopsy is surgical and stitches and an endoscopy. Is surgical considered essential? TIA

Louise Norris
Editor
1 year ago
Reply to  Sharon P

If it’s a large group plan (in most states, that means more than 50 employees), it’s not required to cover essential health benefits other than preventive care. Instead, large group plans are just required to provide minimum value (in order to avoid an employer mandate penalty), which is defined as covering at least 60% of average costs and providing “substantial” coverage for inpatient and physician services: https://www.healthinsurance.org/special-enrollment-guide/an-sep-if-your-employer-plan-doesnt-measure-up/#MV

out of state employer
out of state employer
1 year ago

OK so if an employer I contract with offers health insurance but they are in a different state than me and there are no in network providers? The employer is 1500 miles away all network doctors are in that state so I effectively cannot use the insurance where I live. Based in my income level I would qualify for substancial subsidies on the exchange but the existence of health insurance, although expensive and worthless, through my employer has me concerned I would have to pay this back at the end of the year.

Louise Norris
Editor
1 year ago

If you’re a contractor (as opposed to an employee), are you certain that an offer of coverage has been made to you? It’s unusual for employers to offer coverage to contractors, and also unusual for an employer to offer localized coverage to an out-of-state employee.
But assuming that is the case, you could reach out to the marketplace in your state to see if they’ll approve a subsidy for you. This is the employer coverage tool that’s used by HealthCare.gov: https://www.healthcare.gov/downloads/employer-coverage-tool.pdf Technically, the only requirement for adequate employer-sponsored coverage is that it’s affordable and provides minimum value (cover at least 60% of average costs and provide “substantial” coverage for inpatient and physician services). There’s not a specified network adequacy component to minimum value, but I wonder if you might be able to appeal that on the grounds that the plan would not provide “substantial” coverage for inpatient and physician services in your area, nor would it cover at least 60% of average costs for someone in your area.

Hope
Hope
10 months ago

I understanding if my employer offers affordable and the minimum value coverage, we can’t get subsidies through the marketplace if we decline employer insurance. But if the family income is eligible for medicare, can we decline employer insurance? Or do we have to take the employer insurance first and then use Medicare as a secondary insurance.

And what if the children are eligible for CHIP – can the employee choose to only cover himself and spouse and decline children coverage and enroll them with CHIP?

Louise Norris
Editor
10 months ago
Reply to  Hope

As a general rule, Medicaid/CHIP coverage is available based on income, regardless of whether a household has access to employer-sponsored insurance. But some states have programs that use Medicaid funds to cover the cost of enrolling members in available employer-sponsored plans and other states supplement employer-sponsored coverage so that it’s as robust as Medicaid would be. So you’ll want to reach out to the Medicaid office in your state to see if a program like that is available. If not, you should be able to enroll in Medicaid/CHIP if your household’s income is in the eligible range.

Jliz
Jliz
9 months ago

Lost my job during shut down in 2020, took a job making 2x less than what I was. My new employer does have a good insurance plan, which I signed up for. And even though it’s good insurance I’m finding it difficult to pay for it, since I’m only making roughly 22k a year now. Does this fall into the 9.83% you speak of? I’m the only one in my household. The ironic thing here is when I was making more money before pandemic my insurance was less. Now I’m making way less and my insurance is way more? I’m paying a little over $300 a month.

Last edited 9 months ago by Jliz
Louise Norris
Editor
9 months ago
Reply to  Jliz

9.83% of $22k is about $2,163 per year in premiums, or about $180/month. By that measure, the plan you have is not considered affordable and you’d be able to switch to a plan in the marketplace and qualify for a subsidy.

But there are a couple of caveats here: First, it’s important to understand that if your employer offers a less expensive plan, the affordability calculation is based on that plan rather than the plan you have (assuming the lower-cost plan is comprehensive enough to provide minimum value: https://www.healthinsurance.org/special-enrollment-guide/an-sep-if-your-employer-plan-doesnt-measure-up/#MV )

Also, you may not be able to drop your employer’s plan until your group’s open enrollment period. They may be providing plan change flexibility in 2021 due to COVID, as the federal government is allowing (but not requiring) this: https://www.healthinsurance.org/obamacare/state-and-federal-efforts-to-improve-access-to-covid-19-testing-treatment/#FSA

Maggie
Maggie
6 months ago

Would this scenario be considered unaffordable….$33,000 per year ($2,560 per month gross) but employer requires you to pay $1465 for a major medical plan per month. Since that situation is completely unreasonable do you qualify to stay on the marketplace for your health insurance?

Louise Norris
Editor
6 months ago
Reply to  Maggie

Maggie, is that just for the employee alone? If so, then probably yes, although it would depend on whether the household has any additional income (affordability rules are based on total household income, not just the income from that particular job).

But if that cost is the premium to also cover a spouse and/or dependents, the family is probably not eligible for subsidies in the marketplace due to the “family glitch:” https://www.healthinsurance.org/obamacare/no-family-left-behind-by-obamacare/

Here are the specific rules that are used to determine whether a household can apply for subsidies in the marketplace: https://www.healthinsurance.org/special-enrollment-guide/an-sep-if-your-employer-plan-doesnt-measure-up/

Poor & Broken
Poor & Broken
6 months ago

Love it! Employer paying 70 some percent of family coverage? What a joke! I am a school teacher and bring home about 2300 bucks a month. To insure my family on the “offered” plan of my school with a ten thousand dollar deductible is $$1650 a month over what they’ve kicked in for my personal plan. Now tell me how that’s affordable. I’m sure it’s more than just a couple million of us who are screwed. I cannot get on the Obama plan to insure my family but people making 90 some thousand bucks a year can get insurance for less than 100 bucks a month. My kids who work cannot get on Obama plan themselves as they would have to make more than 15 thousand a year to qualify on their own. Meanwhile we do not go to the doctor unless we absolutely have to and are continually paying doctor bills. Obama Care sucks!

Louise Norris
Editor
6 months ago
Reply to  Poor & Broken

I’m so sorry that you’re caught in the “family glitch” conundrum. Your example illustrates how unfair that rule is, and unfortunately, it was not addressed by the American Rescue Plan or by the currently-under-consideration Build Back Better Act (at least the version that passed the House did not address it, although it remains to be seen what the Senate might do).

One point, however, about your grown kids’ coverage: It sounds like maybe they’re in states that haven’t expanded Medicaid under the ACA? There are still 11 states where there’s a “coverage gap” for people who earn less than the poverty level: https://www.healthinsurance.org/faqs/what-is-the-medicaid-coverage-gap-and-who-does-it-affect/ Under the ACA, adults earning up to 138% of the poverty level were supposed to qualify for Medicaid, and people earning more than that would get premium subsidies in the Marketplace. But there are 11 states that have refused to accept federal funding to expand Medicaid, and have thus left people earning under the poverty level with no realistic coverage options.

In those states, a single adult has to earn at least $12,880 in 2022 in order to get premium subsidies. HOWEVER, keep an eye on the Build Back Better Act that’s currently under consideration in the Senate. Lawmakers are trying to create a program to ensure that people in those 11 states would be able to access premium subsidies even if their income is under the poverty level. This problem wouldn’t exist in the first place if those states hadn’t rejected Medicaid expansion. But Congress is trying to ensure that people who have been left behind will be able to access coverage. If this is important to you, I encourage you to reach out to your Senators and ask them to pass the Build Back Better Act. It would ensure that even in the states that haven’t expanded Medicaid, people with low incomes are able to access affordable health coverage.

Leonora Christaldi
Leonora Christaldi
4 months ago

I finally got a full time position with a company an after 90 days had to choose health coverage, so sure okay .. prior to this I had the state medicaid coverage which I have always felt was the low budget with services. Limited services.. maybe I’m wrong, however, with that vision and dental insurance was also not anything that would help with health problems in those areas at all.. so okay sure . this company offers bcbs and i’m told is excellent health plan.. only I go to choose the options . and the result is I’m now having to pay close to $800 a month ! this is horrible and it’s wreaking havoc on my ability to financially provide for myself and family.. Why is it so inflated and expensive.. ? Sure the employer contributes .. but I”m contributing so much to where it’s damaging my life.. Do you know what an extra $800 in income a month can do for a family ? this family is struggling and this is beyond unjustified and damaging the livelihood of hard working families! OMG .. what is wrong with congress and the healthcare system ? seriously ? Congress people dont worry about it because they have health coverage paid for 100% how is this helping americans ? especially coupled with the fact that food prices have trippled .. and gasoline ? holy freaking cow.. why isnt somebody doing something about this .. what is it that the administration fat cats dont comprehend.. read again.. that’s what they dont understand. they have the mentality .. looks good from where I live. I hate this! I’m smothering and this is so unacceptable!

Louise Norris
Editor
4 months ago

I’m so sorry you’re struggling with the cost of health insurance. The average employer-sponsored family health coverage costs $1,852/month in premiums, and the average worker pays $500 of that out of their paychecks: https://files.kff.org/attachment/Report-Employer-Health-Benefits-2021-Annual-Survey.pdf It sounds like your employer is having you shoulder a bit more of the premiums than average, but that’s very common among smaller businesses.

Members of Congress do not get free health insurance coverage. They have to get their coverage through the health insurance exchange in DC, and although the government (their employer) does contribute to the premiums just like any other large employer would, members of Congress do still pay about a quarter of the cost of their premiums: https://www.thoughtco.com/salaries-and-benefits-of-congress-members-3322282#toc-benefits-paid-to-members-of-congress

Charlie Hernandez
Charlie Hernandez
3 months ago

An item to consider when thinking about enrolling family members separate from the employer sponsored plan is the potential loss of health insurance premium tax deductions when you prepare taxes at the end of the year. You can only claim the health insurance premiums as tax deductions if you itemize your deductions as opposed to taking the standard tax deduction, and only if they exceed 7.5% of your adjusted gross income.

Louise Norris
Editor
3 months ago

That is certainly something to consider, and we have more about it here: https://www.healthinsurance.org/faqs/can-i-deduct-my-exchange-premiums-when-i-file-taxes-next-year/
That point is also already noted in the final section of the article, but I’ll include it near the beginning as well.

Last edited 3 months ago by Louise Norris
Anonymous
Anonymous
2 months ago

If someone declined employer coverage because they had Medicaid, and then they lose Medicaid but this happens outside of the employer plan’s enrollment window, can they enroll in a Marketplace plan with premium tax credits while they wait for their employer plan enrollment window to reopen? Put another way, are they considered to have an offer of employer coverage even though they are currently unable to enroll in that coverage, or are they considered to have “declined” an offer of coverage and therefore ineligible for tax credits?

Louise Norris
Editor
2 months ago
Reply to  Anonymous

For the offer of employer-sponsored coverage, it doesn’t matter whether the person declined that coverage or not. It will still prevent them from being eligible for premium tax credits in the marketplace.

So in this case, they will be able to enroll in a marketplace plan due to the loss of Medicaid (even if it’s outside of the annual open enrollment period). And they will also have an opportunity to enroll in the employer’s plan due to the loss of Medicaid coverage.

But premium tax credits in the marketplace will not be available due to the offer of employer-sponsored coverage, assuming it meets the affordability and minimum value tests: https://www.healthinsurance.org/special-enrollment-guide/an-sep-if-your-employer-plan-doesnt-measure-up/

Zach B
Zach B
1 month ago

I think my wife & daughter have been receiving the subsidy in error… they’re Native American and use an agent to help enroll and renew every year. We don’t remember the agent ever asking us if I am offered affordable health insurance by my employer – which I am, based on the definition you provide, and am currently enrolled in it as an individual. Now I’m concerned the IRS will ask for their subsidies back from the last few years… I don’t know how much of her payment has been subsidized but it could be thousands when totaled. I will speak with the agent to see why (and how) he has them set up to receive subsidies, but I’d first like to know your thoughts. What should we do? Very helpful article, thank you.

Louise Norris
Editor
1 month ago
Reply to  Zach B

Zach,

This is a potentially difficult situation, and you’ll want to discuss it with the agent to see how the information has been entered into the enrollment system. There is a question on marketplace applications about access to employer-sponsored insurance, but it’s possible that there was a miscommunication when your wife was completing the application with the agent.

However, the IRS would only know about the offer of coverage if you work for a large employer that sends Form 1095-C to the IRS. If they haven’t flagged this as a problem yet, the premium tax credits from previous years would likely only have to be returned to the IRS in the event of an audit.

But now that you are aware of the problem, you should work to fix it going forward. If you notify the marketplace that employer-sponsored coverage is available, the subsidies will end at that point. But your wife and daughter would have to wait until your employer’s next open enrollment period to switch to your plan, which would leave them either uninsured or paying full price for a marketplace plan between now and then. I would recommend talking with the agent to see if they can help you sort through this.

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