Employer Group Coverage
Many employers or employee associations offer health insurance to their employees. In fact, the Affordable Care Act requires employers with more than 50 full-time equivalent employees to offer health coverage that meets certain minimum requirements. Smaller employers may offer insurance too.
Employer-sponsored health insurance is selected and purchased by your employer and offered to eligible employees and their dependents.
Advantages of an employer plan:
- Your employer does all of the work choosing the plan options.
- Your employer often splits the cost of premiums with you.
- Your portion of the premium may be automatically deducted from your paycheck each pay period.
- Premium contributions from your employer are not subject to federal taxes, and your contributions can be made pre-tax, which lowers your taxable income.
- Your employer provides policy documents and answers questions about your plan.
Employer-sponsored health insurance is different from the kind of policy you buy with Covered California. Employer-sponsored insurance is often a group plan – a group of employees who are insured together under an employer policy. Covered California, on the other hand, sells individual insurance – a policy that you purchase just for yourself or your family.
Advantages of an individual plan:
- You can choose the insurance company, the plan and the options that meet your needs.
- You can renew or change health insurance plans, options and health insurance companies during the annual Open Enrollment period. You can also enroll or change your plan if you qualify for a special enrollment period with a qualifying life event.
- Your plan is not tied to your job, so you can change jobs without losing your coverage.
- You can choose a plan that includes the doctors and hospitals you trust.
- You may be eligible for federal or state financial help to pay for your insurance.
In most cases, if you’re eligible for employer-sponsored insurance, you aren’t eligible for financial help to buy a health plan through Covered California.
Employer-Sponsored Coverage
Employers offer many types of health coverage options, such as group insurance, Health Reimbursement Accounts (HRAs), supplemental plans, flex spending accounts to use with a health plan, and COBRA.
With so many choices, you might wonder if you should enroll in your employer plan or shop with Covered California instead. In most cases, your employer offer is your best bet. In fact, if your employer offer meets the federal affordability and minimum value standards, you will not qualify for financial help to lower the cost of a Covered California health plan.
What is employer-sponsored coverage?
Employer-sponsored coverage, also known as employer-sponsored insurance or employer-provided health insurance, is health insurance offered to you and your dependents through your job. Your employer may offer a choice of group health plans to eligible workers and cover part of the premium (monthly cost). The employer often pays most of the premium and the employee pays the rest. You may have coverage as a current worker or retiree.
You can shop for health coverage through Covered California, but you won’t qualify for financial help in the form of premium tax credits if your employer offers a health plan that meets minimum value standards and is considered affordable. A health plan is considered minimum value if it covers at least 60 percent of the total cost of medical services and provides enough coverage for hospital and doctor services. For 2023, a health plan is considered “affordable” if the plan’s premium is not more than 9.12 percent of the employee’s household income. Use the Affordability Tool to determine if your employer-sponsored coverage is affordable.
Frequently Asked Questions
What happens if I lose my employer-sponsored coverage?
Even if you quit or get fired, you can buy a plan through Covered California or sign up for COBRA if you lose your employer-sponsored coverage.
What happens if I have a Covered California plan and then get an offer of health coverage through my job?
If the offer of health coverage meets the minimum value standard and is considered affordable, you will no longer qualify for financial help to lower the cost of a Covered California health plan. To find out if your employer-sponsored plan is considered affordable, use the Affordability Tool, or print or download the Employer Coverage Worksheet.
What if I missed my employer’s open-enrollment period?
You can still sign up for a health plan through Covered California. You will have to pay full price unless your employer-sponsored coverage is considered not affordable and does not meet minimum value standards. Use the Affordability Tool to estimate if your employer-sponsored coverage is affordable.
How does having employer-sponsored health coverage affect my taxes?
Employers deduct premium payments from your paycheck before taxes, which lowers your taxable income.
Contact Covered California for help getting enrolled or if you have other questions.
Employer Coverage for Family Members
Affordability for Family Coverage
For purposes of employer-sponsored coverage, family means the employee, spouse (if filing a joint tax return) and any dependents claimed on the tax return. Non-dependents who could enroll as members of the coverage unit through the “under-26 rule” are not considered to be part of the tax family.
Beginning Dec. 12, 2022, affordability for family members will be determined based on the cost an employee has to pay for family coverage.
Until now, if family coverage were available from an employer and just one family member had an affordable offer of coverage, all family members were ineligible for financial help (in the form of tax credits) to buy a health plan through Covered California. This was even when the cost of coverage for the whole family was greater than 9.61 percent of family income. This definition of “affordable” employer coverage was known as the “family glitch.”
Now the glitch is fixed. If the employee must pay more than 9.12 percent of household income toward the premium for a family plan, the plan is considered unaffordable. And the employee’s family members may qualify for financial help (both tax credits and cost-sharing reductions).
In fact, family members may qualify for tax credits even when the employee does not. If the employee has an offer of employee-only coverage that is considered affordable (9.12 percent of household income) and provides minimum value, the employee will not qualify for financial help, but their family members may still qualify for financial help.
The rules for how to calculate affordability of employer-sponsored coverage have changed. The Affordability Tool can help you estimate if you or your family members qualify for financial help.
For help with questions about employer-sponsored coverage or getting enrolled, contact an agent or certified enroller, visit our Support page, or use Help on Demand.
See the examples below (all employer-sponsored plans in these examples are assumed to meet the minimum value requirements):
Example 1
- Employee’s monthly household income = $3,500 (about $42,000 per year)
- 9.12 percent of the employee’s monthly household income = $319
- Monthly cost to the employee for the lowest-priced plan the employer offers for self-only coverage = $270
Is the plan affordable?
YES, the employee’s share of the lowest cost self-only plan ($270) is less than 9.12 percent of the employee’s household income ($319). The employee does not qualify for financial help to lower the cost of a Covered California health plan.
Example 2
- Employee’s monthly household income = $2,500 (about $30,000 per year)
- 9.12 percent of the employee’s monthly household income = $228
- Monthly cost to the employee for the lowest-priced plan the employer offers for self-only coverage = $285
Is the plan affordable?
NO, the employee’s share of the lowest-cost self-only plan ($285) is more than 9.12 percent of the employee’s household income ($228). The employee may qualify for financial help to lower the cost of a Covered California health plan.
Example 3
- Employee’s monthly household income = $2,500 (about $30,000 per year).
- 9.12 percent of the employee’s monthly household income = $228.
- Monthly cost to the employee for the lowest-priced plan the employer offers for self-only coverage = $285.
Is the plan affordable?
NO, the employee’s share of the lowest-cost self-only plan ($285) is more than 9.12 percent of the employee’s household income ($228). The employee may qualify for financial help to lower the cost of a Covered California health plan.
- Monthly cost to the employee for the lowest-priced plan the employer offers for family coverage = $500.
Is the plan affordable?
NO, the employee’s share of the lowest-cost family plan ($500) is more than 9.12 percent of the employee’s household income ($228). The employee’s family members who are part of the tax household may qualify for financial help to lower the cost of a Covered California health plan.
For help with questions about employer-sponsored coverage or getting enrolled, contact an agent or certified enroller, visit our Support page, or use Help on Demand.
