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We get health insurance through my job, but the coverage isn’t very good. Can I enroll in an exchange plan instead, and get a subsidy to help pay for it?

Q. My income is about $50,000 and I have one child. We get health insurance through my job, but the coverage isn’t very good. Can I enroll in an exchange plan instead, and get a subsidy to help pay for it?

A. Just about anyone can enroll in an exchange plan. But eligibility for a subsidy depends on how much your group plan costs and the quality of the coverage. Based on income alone, you’d be eligible for a subsidy (the upper income limit for subsidies for a household of two will be about $64,000 for 2017 coverage).  But regardless of your income, you’re not eligible for a subsidy if you have access to an employer-sponsored plan that is “affordable” and meets “minimum-value” requirements.

Affordability test

“Affordable” means that the premium you pay for just your portion of the group coverage has to be less than 9.66 percent of your household income in 2016 (this will increase to 9.69 percent in 2017). This can be a significant issue for employees who pay a lot to add dependents to their plan.

Even if the total amount you pay for coverage for yourself and your child is more than 9.66 percent of your income, if your own portion of the premium is less than 9.66 percent of your income, your coverage is considered “affordable.” If your portion is more than 9.66 percent of your income, you’d be eligible for a subsidy in the exchange.

Minimum value test

Minimum value” means that the plan pays for at least 60 percent of covered services. All new (since 2014) plans in the individual and small-group market have to meet this threshold going forward, but in the large-group market there aren’t as many restrictions. If your group plan doesn’t meet minimum-value requirements, you’d be able to apply for a plan in the exchange and qualify for a subsidy.

Most employer-sponsored plans do conform to the minimum-value rules though. Large employers have to pay penalties if they offer plans that don’t meet the minimum-value requirements and have employees who opt for a subsidized exchange plan instead. So there’s an incentive for employers to make sure that their plans do meet minimum-value rules.

If your plan changes mid-year such that it either becomes unaffordable or stops providing minimum value, you’ll have access to a special enrollment period during which you can enroll in a plan through the exchange, with a subsidy assuming you’re still eligible based on income.

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