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- Companies typically are not allowed to pay for or reimburse you for individual health insurance
- They will be responsible for paying a fee if they do reimburse you for your individual health insurance
- Most large employers are required to offer group insurance to their employees, which is why they should not be reimbursing individual health insurance
- If large companies do not offer group health insurance when they are required to, they might have to pay a fine under the Affordable Care Act guidelines
Is my company allowed to reimburse me for individual health insurance?
Employers are typically not allowed to reimburse employees for a private health insurance plan that they bought on their own. There are some types of plans that employers can reimburse you for but they are not individual basic health insurance plans. These include separate benefit plans that cover things such as dental and vision that might not be covered by your original health insurance plan.
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They also might include plans for retired employees and some Section 105 plans, but not always. Employers are prohibited from reimbursing you for your monthly premiums for a plan you bought on the marketplace or through a private insurance broker.
What happens if my employer does reimburse me for having an individual health insurance plan?
If your employer does reimburse you for a private insurance plan, they might have to pay a fine of $100 a day, which is equivalent to $36,500 a year, for each employee that they are reimbursing.
This fine is typically for large employers who are subject to the employer mandate under the Affordable Care Act regulations. However, some smaller employers are exempt from the employer mandate and are allowed to offer a healthcare reimbursement plan, which is slightly different than individual health insurance.
Small businesses also have the option of purchasing group insurance through the Small Business Health Options Program(SHOP) which allows them to offer insurance to their employees at a discounted rate.
What is the employer mandate under the Affordable Care Act?
The employer mandate requires most larger companies to offer health insurance to their full-time employees, as opposed to having their employees purchase individual health plans and reimburse them. Generally, if you work for a company with 50 or more full-time equivalent employees, your employer is required to offer all full-time employees a group plan.
Those who work less than 30 hours a week or less than 130 hours in a month do not have to be offered health insurance through their employer, regardless of the company’s size.
If your employer does not comply with these regulations, they may have to pay a penalty fine. The fee is $2,000 per full-time employee, except for the first 30 employees, if the company does not offer any group insurance plan at all.
If your employer offers health insurance but it does not meet minimum value or affordability standards, the fee is either $3,000 per each full-time employee receiving marketplace subsidies or still $2,000 per full-time employee except the first 30.
What do I do if my employer does not offer me health insurance?
If you are a full-time employee for a large company that is required to offer a group health insurance plan but is not doing so, you can purchase a plan on the healthcare exchange marketplace.
You will be eligible for subsidies and tax credits through the marketplace based on your income if your employer is not offering you insurance that meets minimum value standards or not offering you insurance at all.
If your employer does offer health insurance, it is recommended that you enroll in this group plan as opposed to an individual marketplace plan. If you enroll in a marketplace plan, you will not receive an employer contribution and you will not be eligible for savings on the marketplace. An employer-based plan will most likely be less expensive for you.
What if I choose not to get insurance through my employer or the healthcare marketplace?
If you choose not to get a health insurance plan, even when options are available to you, you will have to pay the individual mandate penalty fine. The fee is either 2.5 percent of your household income or $695 per adult in the house and $347.50 per child in the house with a maximum amount set at $2,085. You will have to pay whichever of the two is higher.
Can a company pay for individual health insurance?
Typically, a company cannot reimburse you for individual health insurance. Large employers are required to offer group health insurance plans to full-time employees instead. Smaller employers may be allowed to offer you a healthcare reimbursement plan, but they can also purchase group plans for employees on the SHOP network.
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