What if your employer’s health insurance is too expensive?
“To sum it up…”
- An affordable Obamacare qualified health plans must cost less than 8.13 percent of annual family income.
- Affordable employer-sponsored coverage must cost no more than 9.65 percent of household income, after the employer’s contribution.
- The lack of affordable marketplace insurance qualifies the individual or family for an exemption from the individual mandate.
- If the lowest priced self-only coverage exceeds 8.13 percent, then it qualifies for an exemptions but not for Marketplace plans and cost assistance.
- Family members qualify for exemption and use of Marketplace when coverage, after employer contribution, is over 9.65 percent of household income.
If an employer offers insurance that is less than 9.65 percent of his or her family income, then that person cannot use the Marketplace and cannot get Marketplace cost assistance. If the employer offers insurance to the employee and family that is less than 9.65 percent of family income, then neither the employee nor the family can use the Marketplace or get assistance.
To activate the Marketplace option, the employer must offer insurance that costs more than 9.65 percent of family annual income.
Comparison shopping can help put plans side-by-side based on the effect on the individual and family situation. Comparison shopping can put the consumer’s concerns first, and help find the best fit.
Find the right healthcare coverage for your budget by entering your zip code in our free quotes comparison tool!
Affordable Health Plans Defined
The Affordable Care Act defines affordable employer-sponsored coverage. In the calendar year 2016, it must cost no more than 9.65 percent of household income after the employer contribution.
For the 2017 calendar year, the figure rises to 9.66 percent after the employer’s contribution.
It is possible for the family to get an exemption while the employee cannot. In this situation, there are other types of exemptions such as temporary hardship.
Obamacare and Affordable Insurance
The Affordable Care Act made substantial changes to the insurance industry. These health insurance reforms were intended to protect consumers from the overreach of insurance companies. One particular target of the legislation was the widespread practice of price discrimination.
Many companies charged high rates without economic justification. For example, they charged high rates for women, prior illnesses, and in situations in which there was little or no competition. Customers that needed insurance had little choice.
The Affordable Care Act defined the concept of affordable insurance; it defined affordable in terms of exemptions from the mandate, participation in the Marketplace, and alternatives to expensive employer-sponsored insurance.
The Individual Mandate
To most Americans, the major change introduced by the Affordable Care Act was the individual mandate. It requires every eligible person to get and keep health insurance. The law and its rules define health insurance as qualified health plans that have the below-listed elements.
The Affordable Care Act does not set prices for insurance. However, it does provide relief from the penalty when the prices of available qualified health plans are too high.
- Essential health benefits
- Minimum economic or actuarial value
- Minimum essential coverage
Affordability is a Basic Part of Reform
The law and its regulations created exemptions from the mandate, and one of them requires affordable insurance. Without an opportunity to buy affordable insurance, the mandate would not apply. This put the concepts of low-cost and affordable insurance at the base of the health insurance pyramid.
Affordability is a vital component of the Patient Protection and Affordable Care Act of 2010. Americans will not have to pay the penalty for not having insurance if there is no available, affordable insurance.
Affordable Marketplace Insurance
The Affordable Care Act defines marketplace insurance for individuals. The price cannot exceed 8.13 percent of the annual family income.
If the marketplace does not offer a plan at the minimum price or less, then the individual can get an exemption from the individual mandate for up to one year.
Employer-sponsored health insurance has a different standard. In 2016, the rule required less than 9.65 percent of family income. In 2017, it rises to 9.66 percent based on the costs of living.
When the employer’s offer of insurance exceeds 9.66 percent of annual family income, the employee can reject the offer and use the Marketplace assistance to get qualified insurance.
Under Obamacare, the 9.65 limit applies to self-only employer-sponsored coverage. After the employer contribution, the plan must cost no more than 9.65 percent of adjusted household income.
The standard increases to 9.66 percent for the calendar year 2017. The law favors employer-paid benefits. Some consumers with employer plans would rather try the Marketplace.
If they switch, they can only buy at full price on the exchange, and without Obamacare subsidies and cost assistance. The 9.65 percent limit applies to the below-itemized employer offers.
- Employee self-only coverage
- Family-member-only coverage
- Aggregate cost of two or more family members defined as the average cost for one or more dependents excluding the employee.
The Family Affordability Glitch
The Affordable Care Act and its rules set a limit for Affordable employer-sponsored coverage for the employee’s family. The rule is that insurance that costs more than 8.13 percent of the annual income in 2017 is not affordable. The family would be qualified for an exemption based on hardship or affordability.
The exemption does not solve the need for insurance coverage, but it does open possibilities that may be within economic reach such as Medicaid Expansion and CHIP. This gap is called the Family Affordability Glitch. It leaves people with no access to Marketplace policies that otherwise qualify.
Alternatives to Self-only Employer Coverage
The employee can reject an offer of employer-sponsored coverage that exceeds 8.13 percent of the annual family income. Although there was no employer offer to the family, they are not free to use the marketplace.
If the low offer for employee self-only coverage exceeds 9.66 percent of family income, then the employee and family can use the marketplace and get cost assistance.
Alternatives to Employer-sponsored Family Coverage
The family does not have to accept employer coverage that exceeds 8.13 percent of annual income. They cannot use the Obamacare Marketplace or state exchange to find lower cost insurance. If the employer offers insurance that cost 9.66 percent or higher, then the family can use the Marketplace.
For many, the best Marketplace option is to get the lowest premium policy available. These High Deductible Health Plans can pair with Health Savings Accounts.
The low premiums may allow enough budget to build some funds in a tax-free Health Savings Account. The HSA can pay deductible expenses while the low premium insurance protects against a catastrophic event.
Affordable Insurance and the Marketplace
The Affordable Care Act and its rules define affordable employer-sponsored insurance for each year. For 2016, the rules define affordable employer-sponsored insurance as qualified health insurance that costs 8.13 percent or less of the annual family income. The 8 percent threshold does not qualify the individual for full marketplace participation.
The individual qualifies for marketplace assistance when the lowest priced self-only coverage is greater than 9.65 percent of family income.
Comparison shopping is an effective tool for finding value in health insurance plans. Comparison shopping goes far beyond the price of the insurance premiums. Click here to enter your zip code and compare quotes for free today!