The Open Enrollment Period for health insurance is here: November 1 – January 15
Enroll in a new health plan or reevaluate your current coverage to see if it’s still a good fit for you. You can make the following changes during this period:
- Enroll in a health insurance plan for the first time
- Change health insurance plans
- Change your current plan’s dependents
Still have questions? Learn more about the health insurance Open Enrollment Period.
If My Employer Offers Health Insurance, Do I Have To Take It?
No, you are not required to participate in your employer’s health insurance plan if purchasing health insurance on your own makes more financial sense. For example, you may want to opt for alternate coverage in the following situations:
- If your employer offers health insurance but does not contribute enough to the premiums
- If they do not offer robust coverage
- If your preferred provider does not accept your employer’s health insurance
However, though you’re not required to accept a health policy funded by your employer, you should strongly consider your employer’s group plan before looking for other options. Group health insurance typically offers coverage at a lower premium than an individual plan and may also provide tax benefits.
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What Is Employer Health Insurance?
Approximately half of Americans, 159 million, receive health benefits through employer health insurance. Employer health insurance, often called a group health plan, is a healthcare plan employers provide for the company’s workforce and their dependents. These group health plans are often more affordable than individual policies because the risk is spread across a large pool of people.
How Does Employer Health Insurance Work?
With a group health plan, your employer is responsible for choosing the policy type, determining what the health plan covers, and shouldering a portion of the premium cost. The employer purchases the plan from the insurer wholesale, which is possible thanks to the reduced risk of the policy being utilized. Additionally, because the coverage is less risky to the insurer, the cost to the employee may be less than insurance from other sources.
When Must Your Employer Offer Insurance?
The Affordable Care Act (ACA) requires that employers with 50 or more full-time-equivalent employees offer affordable health insurance to qualified workers and dependents, or else they’ll face penalties. The group health plans they offer must also meet these minimum standards:
- Employee contributions to the health plan must not exceed a certain percentage of an employee’s household income. That percentage is 9.83% as of 2023.
- The plan must pay for at least 60% of the total cost of covered healthcare services.
Many employers choose to provide High-Deductible Health Plans (HDHPs) since these plans carry lower monthly costs, allowing them to offer employees an affordable premium. However, HDHPs typically require more out-of-pocket spending before insurance starts paying for care. Some employers may also offer Health Savings Accounts (HSAs) in conjunction with HDHPs, which is a tax-advantaged savings account that lets you set aside money to pay for medical expenses.
When Should You Accept The Coverage?
Employer-sponsored health insurance plans are generally affordable since they cannot cost more than 9.83% of an employee’s income for the lowest tier of coverage, according to the Affordable Care Act. So, in most cases, you’re probably better off enrolling in a group health plan than getting your own insurance, especially if the following is true:
- The group insurance plan has reasonable premiums and deductibles that fit within your budget
- The alternative options are limited or more expensive
- Your employer’s family insurance plan offers affordable coverage and pays for services relevant to your dependents’ healthcare needs.
When Should You Not Accept the Coverage?
Here are a few scenarios where accepting your employer’s health insurance coverage probably would not make sense.
- Your employer’s contribution to the premiums is low
- You want a better health insurance plan than what your employer offers
- You’re already covered under your spouse’s plan or through a government program like Medicare or Medicaid
- Your preferred healthcare provider does not accept your employer’s health insurance
- The group health plan does not meet your coverage needs
Do Marketplace Subsidies Apply to Employees?
Suppose you can access a group health plan. In that case, you’re typically not eligible for marketplace subsidies since you’re already receiving a subsidy from your employer in the form of pre-tax health insurance benefits and cost-sharing. The only exception is if your employer-sponsored health plan does not meet the minimum standards outlined in the ACA and costs more than 9.83% of your household income.
Pros and Cons of Employer Health Insurance
- Tax benefit
- Lack of control
- Benefits may end after you leave the job
- May not cover all healthcare needs
Before enrolling in an employer-sponsored health insurance plan, consider these pros and cons so you know you’re making the most informed decision.
- Affordability: Job-based health insurance plans tend to be more affordable than private insurance options since the employer contributes some of the premium costs
- Convenience: Most employer health insurance plans automatically deduct premium payments from your paycheck.
- Tax benefit: Because premiums are deducted from your paycheck on a pre-tax basis, enrolling in employer health insurance could lower your taxable income.
- Lack of control: You do not have much freedom to customize the group health plan since your employer can choose the health insurance company, determine the coverage, and select other benefits and features.
- Benefits may end after you leave the job: Job-based health insurance coverage typically ends on your last day of work or at the end of that month.
- May not cover all healthcare needs: Since your employer is responsible for choosing the coverage on a group health plan, it may not be the best option if you have specific healthcare needs or preferences.
Alternatives to Group and Marketplace Coverage
Job-based health insurance is not the only option on the market. Here are some alternatives to explore if your employer’s health plan does not meet your needs.
Short Term Health Insurance
As the name suggests, short-term health insurance provides temporary medical coverage when you’re transitioning in life. These types of health plans can be a valid substitute for employer health insurance if you’re in between jobs, waiting for other coverage to begin, outside open enrollment periods, or simply needing temporary coverage in an emergency. However, it’s important to note that short-term health insurance does not have to adhere to ACA standards (unlike employer health insurance), meaning it typically provides limited benefits.
Medicaid is a federal and state program that helps cover medical costs for adults and children with limited income and resources. It covers many of the same medical services a traditional health insurance plan would include hospital visits, doctor appointments, prenatal care, and some preventive care. As of 2023, Medicaid supports more than 90 million low-income individuals in the United States. If you meet the income and eligibility criteria for Medicaid, you can access low-cost health care without enrolling in employer-sponsored health insurance.
Can You Have Employer Health Insurance and Medicaid At the Same Time?
Yes, you can simultaneously enroll in employer-sponsored health insurance and Medicaid since dual coverage is perfectly legal. One policy will be assigned as your primary plan, and the other will be your secondary health insurance plan. However, you’ll need to properly coordinate the two benefits to ensure your medical expenses are covered. If you have questions about managing the two plans, talk to your employer or Medicaid provider.