The Basics
Health coverage helps pay for medical costs. A health care plan has a set of services that the plan provider agrees to pay for if you need them, like when you see a doctor or go to the pharmacy.
One way to get health coverage is through government programs, like Medicare or Medi-Cal. Another way is to get private health coverage by buying an individual plan on your own or by getting coverage through your job, your parent’s job, or your spouse’s job, which is called employer-sponsored group health coverage. Getting coverage through your job or through a family member’s job is the most common way people get health coverage in the United States.
This article is about getting health coverage through an employer. It will help you understand:
- If employer-sponsored coverage is right for you
- What services your plan will cover
- How to choose a plan
- How much you will have to pay for health care, and
- How to sign up.
If you need more help in understanding employer-sponsored coverage after reading this article, we recommend you talk to trained experts. Here are some good resources:
- An employer’s Human Resources department will know about the specifics of the health coverage options it offers.
- The California Department of Managed Health Care can answer questions about your health plan at 1-888-466-2219 (TTY: 1-877-688-9891).
- If you have questions about how your disability affects your health coverage, talk to a benefits planner.
Note: DB101 keeps track of changes to health coverage and related laws. DB101 has been and will continue to be updated to reflect any changes. For news related to health coverage, visit Covered California.
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Is it Right for You?
Almost everyone should be able to get health coverage. The question is, which plan is right for you and your family?
This page looks at whether you might be able to get employer-sponsored coverage. If you can, it is good for you to sign up, because you probably won’t qualify for subsidized individual coverage.
If you can’t get employer-sponsored coverage, consider other options introduced in DB101’s Health Coverage section, such as Medi-Cal, Medicare, and individual health plans.
Does your employer, your spouse’s employer, or your parent’s employer offer coverage?
Many employers offer health coverage as a job benefit, but others do not. Employers are not required to offer this benefit. Contact your employer’s Human Resources department to check.
If an employer offers health coverage as a job benefit for employees, the employer also has to offer the same health coverage to the employees’ children until they turn 26.
If an employer offers coverage to an employee and the employee’s children, they may also let the employee’s spouse join the plan, but they are not legally required to do so.
If your employer, your parent’s employer, or your spouse’s employer offers health coverage, continue reading this article.
If not, check out DB101’s other health coverage articles.
Can you get the coverage your employer offers?
Many employers offer health coverage for employees and their families only if their employees meet certain requirements. They can include things like:
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The employee must work a certain number of hours each week (called the active work requirement).
- Example: Your wife’s employer only provides health coverage to employees who work 30 or more hours per week.
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The employee must have worked for the employer for a certain amount of time (called the waiting period). A waiting period cannot be longer than 90 days.
- Example: Your father’s employer provides health coverage to employees who have worked there for at least 90 days.
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You must sign up during open enrollment.
- Example: After you are hired, you have to sign up for your employer-sponsored coverage during your first month on the job. If you don’t, you have to wait until the next open enrollment period to sign up for coverage starting next year.
If your employer, your parent’s employer, or your spouse’s employer offers coverage and you can get that coverage, you probably should. Continue reading this article to learn more about it.
If you cannot get the coverage, check out DB101’s other health coverage articles.
If you can get employer-sponsored coverage, it may mean you can't get tax credits on Covered California. It depends on whether the employer-sponsored plan is considered "affordable."
When an employer offers coverage for the employee:
- If it costs less than 9.02% of the employee's household's total income and meets a certain benefits level, it's "affordable." The employee won't qualify for government help through tax subsidies to reduce the premium on an individual plan.
- If it costs more than 9.02% of the household’s total income, it's not affordable and the employee may qualify for tax subsidies to get a plan on Covered California.
When an employer offers coverage for the employee and the employee's spouse and children:
- If the coverage for the entire family costs less than 9.02% of the employee's household’s total income and meets a certain benefits level, it's "affordable." Nobody in the family will qualify for subsidies on Covered California.
- If it costs more than 9.02% of the household’s total income, it's not affordable and the spouse and children may qualify for subsidies on Covered California. However, the employee will not qualify for subsidies unless the cost of insurance for the employee alone is more than 9.02% of the household’s total income.
Note: Before 2023, the spouse or children of an employee would not qualify for subsidies on Covered California if the employer offered coverage that was affordable for the employee's policy alone, even if the cost to add the rest of the family wasn't affordable. This was called the "family glitch."
Other Options for People Who Can Get Employer-Sponsored Coverage
Depending on your situation, you may still be able to get Medi-Cal if you are offered employer-sponsored coverage. Also, some family members may find that buying an individual plan on Covered California is cheaper than the plan the employer offers, even without government subsidies, or that an individual plan may provide coverage for services that are not covered by the employer-sponsored plan.
Medi-Cal
Medi-Cal is a major government-funded health program that helps people with low income. You may qualify for Medi-Cal if you are in one of these situations:
- Your family’s income is at or below 138% of the Federal Poverty Level (FPL) ($21,597 for an individual; $44,367 for a family of four). There are no limits to how much money or other resources you have. This is the most common type of Medi-Cal. You can read more about this in DB101’s Medi-Cal article.
- You are a child 18 or younger and your family’s income is at or below 266% of FPL ($85,519 per year for a family of four).
- You are pregnant, and your family’s income is at or below 213% of FPL ($45,050 if you are single and pregnant with your first child, $68,480 per year for a family of four, including the baby).
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You have a disability or are elderly:
- Medi-Cal for people with disabilities and seniors may offer additional services, but there are more eligibility requirements and different income rules. DB101's Medi-Cal article explains Medi-Cal for people with disabilities.
- Medi-Cal's Working Disabled Program lets people with disabilities who make more money than the income limits for other types of Medi-Cal get Medi-Cal coverage.Learn more about it in DB101’s Medi-Cal article.
| Your family size: | |
Income limits for your family: | |
| Income-based Medi-Cal, adults (138% FPG) | |
| Income-based Medi-Cal, children (266% FPG) | |
| Subsidized private plans, reduced fees (250% FPG) | |
| Subsidized private plans (no income limit) | -- |
If your family's income is at or below the limit for a program, you may qualify if you meet other program rules.
Notes:
| |
Medi-Cal and Employer-Sponsored Health Coverage
If you qualify for Medi-Cal, it will always be your best choice, even if your employer offers health insurance. That’s because Medi-Cal has no monthly premium and the copayments for services are usually much lower than copayments required by employer-sponsored plans. Also, Medi-Cal may cover some services that your employer-sponsored coverage does not pay for.
Note: You can choose to get Medi-Cal even if you have employer-sponsored coverage. If you have both at the same time, Medi-Cal may decide it is cost-effective for them to pay your portion of your employer-sponsored health insurance's premium. Read about the Medi-Cal Health Insurance Premium Payment (HIPP) program in DB101’s Medi-Cal article.
Nelson is a single father living on his own with his two daughters. He makes $22 an hour repairing shoes and works 30 hours a week, so he makes a total of about $2,900 a month. Because he works 30 hours a week, his employer offers him and his daughters health insurance, but to get it, he would have to pay a $400 premium each month.
Nelson decides to go to his local county social services agency to see if his family would qualify for Medi-Cal, because he doesn’t have enough money to pay the monthly premium for health coverage offered through his job. The case worker looks at his income and explains that he does qualify for Medi-Cal, because his income is less than 138% of FPL for a family of three. Nelson signs up for Medi-Cal and does not sign up for the plan his job offered.
Medicare and Employer-Sponsored Coverage
When you first become eligible for Medicare, you’ll automatically be enrolled in Medicare Part A. You’ll also be enrolled in Part B, unless you tell Medicare that you have private coverage. If you already have employer-sponsored private coverage that covers the same things Part B covers, you avoid paying Part B’s monthly premium. You can always sign up for Part B later without paying a penalty as long as your private coverage meets certain requirements. DB101’s section on Medicare has more information.
You can also choose not to get Medicare Part D. As long as your current private coverage is creditable, which means that it is at least as good as the Part D benefit, you can sign up for Part D at a later time without paying penalties. DB101’s section on Medicare has more information.
Depending on your situation, you might get employer-sponsored coverage, Medi-Cal, and Medicare all at the same time. This can sound confusing, but it can help you, because one form of coverage may pay for costs that your other coverage won't pay for.
The rules about how your different types of coverage pay for things are very complicated, so it’s important to check with your health coverage plans when you have questions about which plan will pay for what expenses.
How Medicare works with other insurance shows how it works when you have Medicare and other coverage.
Union and Association-Sponsored Group Coverage
Some people who are self-employed may not be able to get employer-sponsored group coverage, but could get group coverage through unions or professional associations. Speak to your union or association representative to learn if this is an option for you. If your union’s plan is self-insured, you can contact the U.S. Department of Labor Employee Benefits Security Administration to learn more about your rights.
Note: Starting in 2014, anybody can sign up for individual health coverage on Covered California. Look into Covered California, where you may qualify to get government help paying for individual coverage though tax subsidies. You cannot get this government help for a union-sponsored or association-sponsored plan.
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What it Covers
Health insurance plans are much more standardized than they used to be. In the past, many plans did not cover important services, such as childbirth or mental health services. Now, most plans do:
- Small group plans (employers with 100 or fewer employees) and individual plans must cover a set of benefits which are called Essential Health Benefits (EHBs). Note: Some small employers may offer "grandfathered" plans that don't cover the EHBs, if the plan was in place before the Affordable Care Act (ACA) was enacted in 2010.
- Large group plans (employers with more than 100 employees) have more flexibility, but still have to provide a minimum level of coverage. If you work at a large employer, check with your employer about the exact services their plans cover.
The biggest thing that will vary between different plans is how much you’ll have to pay; and even then, there are limits to how much your insurance can charge you for your care.
Common Benefits
These are the Essential Health Benefits that employer-sponsored plans must provide at employers with 100 or fewer employees (larger employers often offer similar benefits):
- Ambulatory patient services (care you get without being admitted to the hospital)
- Emergency services
- Hospitalization
- Maternity and newborn care (care before and after your baby is born)
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Preventive and wellness services and chronic disease management, including:
- Immunization vaccines for many diseases
- Screening for different conditions
- Counseling for some health issues
- Women’s preventive care
- Children’s preventive care
- Prescription drugs
- Laboratory services
- Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
- Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
- Pediatric services for children, including oral and vision care
Less Common Benefits
There are some types of health care that plans do not have to provide. Here are some examples of services that may not be covered:
- Fertility treatments
- Cosmetic surgery (unless medically necessary)
- Dental care for adults
- Vision care for adults
- Alternative medicine, such as acupuncture
There may be employer-sponsored plans you can get that cover these items. However, no plan has to provide them and the plans that do offer them will likely cost more.
Differences Between Plans
Your employer (or your spouse’s or parent’s employer) may let you choose between more than one health coverage option. Differences between the options can include whether they offer certain benefits, which doctors you are allowed to visit, how much of the monthly premium you must pay, and how much you have to pay each time you visit the doctor or need another medical service.
Employers in California can offer either fully insured or self-insured plans:
- With a fully insured plan, an employer purchases insurance through an insurance company and pays premiums to that company. The insurance company is responsible for covering the costs of health care, as agreed upon in the policy. Most employers offer fully insured plans.
- With a self-insured plan, an employer sets aside its own funds to cover the costs of employee medical expenses directly, not through an insurance company. To the employee, a self-insured plan may seem to function much like a fully insured plan.
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What You Pay
Here we will look at the types of expenses you have to pay if you get employer-sponsored coverage. Then, we’ll look at what factors can make those expenses higher or lower.
Expenses
For employer-sponsored plans:
- The employer will offer to pay all or part of the monthly premium for the employee, the employee’s children, and the employee’s spouse.
- The employee may also need to pay part of the monthly premium
- Everybody covered by the plan will have to pay additional fees when they get certain medical services.
The Monthly Premium
The monthly premium is a set amount of money that has to be paid each month for you to be covered by the plan, regardless of whether you use any health care that month. Generally, the employer will pay a part of the premium and the employee will pay a part.
Employer plans usually offer a coverage option for the employee that costs the employee, for the employee’s premium alone, less than 9.02% of the employee’s family income. That’s the definition of affordable coverage in federal law. The plan should also meet a certain benefits level:
- If the employer is small (100 or fewer employees), the plan must be classified under one of the four coverage levels under the Affordable Care Act (ACA).
- If the employer is large (more than 100 employees), the plan should meet a "minimum value" standard, which means the plan should cover at least 60% of the health costs of the average population. This standard is about equivalent to a bronze-level plan.
If you make $2,000 per month at your job and your employer offers coverage, your employer should offer a plan where you do not have to pay more than $180 per month (9.02% of your income) for the premium. If the premium for your coverage costs $300, the employer should contribute at least $120, so that you pay less than $180.
The employer may offer to help pay the premium for other family members covered by the plan or may require the employee to pay the entire premium for other family members.There is no legal limit to how much the employee may have to pay for coverage for family members. If the premium for family members is very high, they may be better off getting coverage through Covered California. Learn more about affordability rules for family members and how it affects eligibility for tax credits on Covered California.
Note: Before 2023, the spouse or children of an employee would not qualify for subsidies on Covered California if the employer offered coverage that was affordable for the employee's policy alone, even if the cost to add the rest of the family wasn't affordable. This was called the "family glitch."
Additional Fees When You Get Care
Each time you get care, you may need to pay additional fees. Which of these fees you have to pay and how much you have to pay depend on your plan; some plans only have copayments, while others have copayments, co-insurance, and deductibles.
Copayments are a set amount you have to pay for a medical visit or service. The exact amount of the copayment varies depending on the service you get: medications, visits to specialists, lab tests, X-rays, emergency room visits, and other services can all have different copayment amounts.
Under the plan her employer offers, Eliza, her husband, and her son have to pay $40 each time they visit a doctor, $20 for each prescription drug, and $30 for each lab test.
Co-insurance is a set percentage of the cost of a visit or service that you must pay.
Under the plan her employer offers, Eliza, her husband, and her son have to pay 20% of the cost of any surgery. So, if Eliza has surgery costing $5,000, she has to pay $1,000 and her insurance covers the rest.
A deductible is a set amount of money that you pay out of your own pocket each year before the insurance company will begin to pay for certain services, including hospital care, emergency room visits, and brand-name prescription drugs. Once you have paid the deductible, you do not have to pay it again until the next calendar year.
Tip: If you have to pay a deductible before your health plan will pay for your medications, shop around to see where you can get them cheaper. Some stores may have generic medications much cheaper than your usual pharmacy – as low as $5 or less for some medications.
Under the plan her employer offers, Eliza, her husband, and her son have a $2,000 annual family deductible before the plan will pay for their hospital care. If she needs to stay in the hospital for several days to recover from her surgery, she will pay all of the costs herself until she has spent $2,000 on medical expenses. After she has paid that amount, she also has to pay 20% of the rest of the cost. If anybody covered by the plan goes back to the hospital later in the year, they will not have to pay the deductible again.
Maximum Out-of-Pocket Expenses
Each plan has a maximum amount you have to pay each year in fees for medical services (copayments, co-insurance, and deductible). This cap for your out-of-pocket expenses does not include the money you spend on your monthly premiums. The exact amount of your out-of-pocket maximum will depend on your plan.
Eliza’s employer-sponsored plan for her, her husband, and her son:
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Has a $500 per month premium
- Her employer pays $350 each month
- She pays $150 each month
- Requires $40 copayments for visits to the doctor and $20 copayments for generic medications
- Requires 20% co-insurance for hospital care and outpatient surgery
- Has a $2,000 family deductible
- Has a $5,000 family out-of-pocket maximum
When Eliza’s husband has an automobile accident and goes to the emergency room, he has to pay his full $2,000 family deductible, because they hadn’t yet paid it this year. The accident also forces him to have major surgery that costs $15,000. They’ve already paid the annual deductible, so now they just have to pay the 20% co-insurance, which means they pay $3,000 for the operation and the employer-sponsored insurance plan covers the rest. Between the $2,000 they paid for the emergency visit and the $3,000 they paid for the operation, they have spent the entire $5,000 family out-of-pocket maximum for the year.
Her husband has to stay in the hospital for 3 days as he recovers from his operation, and he also needs to take a number of medications to help the recovery and prevent infection. Usually the family would have to pay 20% co-insurance for the hospital stay and a $20 copayment for each medication; but because they already spent the out-of-pocket maximum this year, they don’t have to pay anything — the insurance plan will cover it all. In fact, other than continuing to pay $150 each month for the premium (while Eliza’s employer keeps paying $350 per month), Eliza’s family will not have to pay anything for any of their health care for the rest of the year.
What Affects How Much You Pay
The amount you pay for these expenses if you get an employer-sponsored plan depends on 3 main factors:
- How much of the premium the employer offers to pay
- The plans offered by the employer and the one you choose, and
- The age of the people covered by the plan.
How Much Your Employer Offers to Pay
We already discussed how much the employer may offer to pay each month for the premium for an employee and the employee’s family members. Usually, the employer will offer to pay most or all of the employee’s premium, while paying part of the premium for family members.
The Plans Offered by the Employer
The employer gets to decide which health plans employees and their families can sign up for. Some employers only offer one option, while other employers offer many options. The monthly premiums for plans may depend on where your employer is located; the plans an employer offers in one place could be more expensive than what employers offer in other places.
Usually, an employer will offer to pay a certain amount for the premium of its employees and their families. If an employer offers more than one option and an employee chooses a plan with a higher monthly premium, the employee is responsible for paying the additional amount each month.
Ashley’s employer offers to pay $200 for her premium each month. The cheapest plan offered by her employer costs $200 per month, so if Ashley chooses it, she will not have to pay anything for her own premium. However, she decides that she wants a plan that has lower copayments when she visits the doctor. The plan she likes costs $250 per month. Her employer will still pay $200 per month for the premium, while Ashley will pay $50 per month.
The Plan You Choose
If your employer offers more than one plan, you will be able to make some trade-offs between the cost of the premium and the plan you get.
Generally speaking, there are 2 decisions you can make that will impact what your employer-sponsored plan’s monthly premium will cost you:
- The cost of other fees. If you choose a plan with a higher premium, its copayments, co-insurance, deductible, and out-of-pocket maximum will be lower when you need medical services.
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The type of plan you get. There are 3 main possibilities, with HMOs and EPOs typically less expensive and PPOs more expensive:
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Health Maintenance Organizations (HMOs):
- Have a specific network of health care providers, including doctors, hospitals, labs, and pharmacies and you can’t get treatment from others except in an emergency.
- You have a primary care provider (PCP) and may need to see your PCP for a referral before getting specialist treatment.
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Preferred Provider Organizations (PPOs):
- Have a network of doctors and you can see any of them, including specialists, without a referral.
- You can get health care outside the network, but it is more expensive.
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Exclusive Provider Organizations (EPOs):
- Have a specific network of health care providers, including doctors, hospitals, labs, and pharmacies, and you can’t get treatment from others except in an emergency.
- You do not need a referral from a PCP to see specialists.
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Health Maintenance Organizations (HMOs):
The Ages of Plan Members
Plan premiums may be higher for older workers and for older family members that are added to the plan. If the employer is small (100 or fewer employees), the plan is covered by the ACA and has to follow rules that limit the cost of a premium based on age:
- Older people can only be charged a premium that is at most three times what a 21-year-old would be charged.
- A plan premium can only charge a family for a maximum of three children under age 21. Any additional children under 21 can be included in the plan without the premium cost going up.
Here are some questions to think about as you compare plans:
- How high a premium can you afford to pay each month?
- How often do you visit the doctor or need other medical services? Try and add up the copayments you would need to pay for those appointments each month. Can you afford those?
- Do you like your current doctors? Which types of health coverage do they accept? Are you willing to switch doctors to save money?
- Are you okay with having a primary care physician who refers you to specialists when you need them? Or do you prefer being able to set up appointments with specialists on your own?
- Are you comfortable with having a deductible for hospital care, outpatient surgery, and emergency room services?
Each family has a different situation, and the right answers for you will depend on your specific needs. For example, if you know you will have to go to the doctor a lot, you may want to make sure that you don’t have high copayments. Or, if you hardly ever go to the doctor, you may prefer to have a lower premium.
Tax-Free Ways to Save Up Money for Medical Expenses
There are a couple of ways you can save up money for your medical expenses. The big advantage of these is that they let you save the money tax-free. The higher the rate of taxes you pay on your earnings, the more these savings plans will help you. If you don’t pay a high income tax rate, they probably aren’t going to help you much.
Health Savings Accounts (HSAs)
Some health plans let you to create Health Savings Accounts (HSAs) to set money aside to help you pay for certain approved medical expenses. For example, you could use the money in this account to pay for expenses, like doctor’s visits or prescriptions, that aren’t paid for by your insurance before you meet your deductible.
You decide how much money to put into the account, up to a certain limit, and you don’t have to pay taxes on the money you put into the account. You can get a health plan with an HSA if your employer offers plans with them.
Flexible Spending Arrangements (FSAs)
A Flexible Spending Arrangement (FSA) is a type of account that can only be set up as a benefit through your employer. You can contribute money to your FSA through automatic payroll deductions and you don’t have to pay any taxes on the money you put into this account. Your employer can choose to make contributions to your account too.
The money from this account is used to reimburse you for qualified medical expenses that you have to pay for that aren’t covered by your insurance. You can decide how much money you want to put into the account, but usually you have to use all of the money in the account by the end of the year, or you lose it.
If you choose to do an FSA, make sure you calculate the amount of money you will actually use, keep track of your expenses, and pay for them using the FSA.
For more information and to find out whether your employer offers an FSA, talk to your employer’s human resources department.
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How to Sign Up
Talk to the employer’s Human Resources department to learn the rules for signing up. An employee may have to be working for a certain period of time, called a waiting period, before signing up for health coverage. The waiting period cannot be longer than 90 days.
It’s important to sign up for coverage when it is first offered, otherwise you may have to wait until the annual open enrollment period, which is usually near the end of the year. Certain changes in family or coverage status may trigger a special enrollment period. For example, if you get coverage through your employer and get married or have a child, your new spouse or baby will be allowed to sign up with your employer-sponsored coverage.
Keeping Your Coverage When You Aren’t Working Temporarily
The Family and Medical Leave Act (FMLA) allows employees to take unpaid leave for certain family and medical reasons, such as the birth of a child or to care for a sick family member. FMLA gives employees that meet certain conditions up to 12 weeks of unpaid leave each year and also protects group health benefits during that leave. Employers must continue to provide coverage for an employee on FMLA leave that is the same coverage at the same cost that the employee would get if the employee were working. Read more about the FMLA in DB101's Know Your Rights and Responsibilities article.
The Uniformed Services Employment and Reemployment Rights Act (USERRA) protects the employment and health care coverage of people who serve in the uniformed services. It allows for health benefits to continue for up to 24 months when a person is not working because they are serving in the uniformed services. The U.S. Department of Labor Veterans’ Employment and Training Service (VETS) has more USERRA information.
Options When You Lose Eligibility for Your Employer-Sponsored Coverage
If an employer or former employer no longer gives you health care coverage because you, your parent, or your spouse was laid off, quit, or had hours reduced, there are different coverage options for you. Look into all of them and see which makes the most sense for your situation.
Other Employer-Sponsored Coverage
If you lose your employer-sponsored coverage, but have a spouse who could get coverage for you through their job, or if you are under 26 and you have a parent who could get employer-sponsored coverage for you, look into those. If you are in that situation, your loss of your health coverage creates a special enrollment period that would allow you to sign up for those plans, even if it is not regular open enrollment time.
Note: If you are in this situation, you may not qualify for government help to pay for an individual plan on Covered California.
Public or Individual Coverage Through Covered California
Your most affordable options may be on Covered California. That’s because if you lose your job, your family income probably goes down significantly and you may qualify for programs or help that you previously didn’t qualify for. Depending on your situation, you may now qualify for Medi-Cal or government help paying for an individual plan through tax credits. Check out DB101’s other health coverage articles to learn more about these options.
COBRA, Cal-COBRA, and OBRA
COBRA is a federal law that covers employees of businesses with 20 or more employees. It allows employees and family members to keep getting the same health plan they got through the employer for up to 18 months after losing employer-sponsored coverage because of a qualifying event (most reasons you might lose coverage qualify). The time periods are sometimes different for spouses and dependents.
California has another law called Cal-COBRA that is similar to COBRA but covers more people, including people who work for employers that have 2-19 employees. It also lets people who worked at any employer with 2 or more employees to keep getting the same health plan they got through the employer for up to 36 months after the qualifying event, twice as long as standard COBRA.
You will have to pay the entire premium for COBRA or Cal-COBRA, including any amount that your employer paid in the past. Your plan could be a lot more expensive than you realize.
OBRA extends COBRA for up to 11 additional months for people with disabilities. The premium can go even higher (up to 150% of the premium for current employees with the same plan), so this should only be done if you have no other options.
For detailed information, see the U.S. Department of Labor's COBRA website and the California Department of Managed Health Care's FAQ about COBRA and Cal-COBRA.
COBRA can turn out to be very expensive. It used to be really important because it was so hard for individuals, especially people with disabilities, to get an individual insurance plan. Now, Covered California makes that much easier and often much cheaper.
However, there are still some situations when COBRA or Cal-COBRA makes sense. Here are a couple of examples:
- If your employer-provided coverage had a high deductible and you have already paid the deductible for the year, think about staying on that plan until the end of the year. If you get a plan on Covered California with a deductible, you will have to start over on paying the deductible.
- If you have a plan and you have already paid the full out-of-pocket maximum for the year, it also might make sense to stay on it until the end of the year, because the only thing you'll have to pay to get health care is your monthly premium; you won't have to spend on copayments, co-insurance, or anything else.
Think about your situation. If you decide to get continuation coverage, remember that it may make sense to stop your continuation coverage and switch to an individual plan through Covered California at the end of the year, especially if you qualify for government subsidies for a plan. See DB101's Buying Coverage on Covered California article for more information.
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Example
Julia’s Story
Julia just started a new job. She is very excited that this job comes with benefits, including employer-sponsored group health coverage. The company she is working for offers two different plans that she can choose from: a Health Maintenance Organization (HMO) and a Preferred Provider Organization (PPO).
Julia is not sure which plan is best for her, so she decides to do some research online to learn the differences between them. After doing some research, Julia feels like she understands what these types of plans are, but she still doesn’t know which plan is best for her, or how much they cost.
She decides to talk to her company’s Human Resources manager, Marjorie, about how much each of the different plans would cost. She learns that she would have to pay $50 a month to enroll in the PPO, but would have no monthly premium for the HMO. She is confused by this, because she thought that all health coverage was free when you get it through your job.
Marjorie explains that each health care plan requires a monthly premium and that the company will pay up to $200 of that premium. Any premium cost over the $200 is paid by the employee.
With the HMO plan, the total cost is $200 per month, so the company would cover the whole cost and the employee wouldn’t have to pay anything.
With the PPO plan, the total cost is $250 per month, so the company would pay the first $200 and the employee would pay the last $50.
Julia starts wondering why anyone would choose to pay more when they could get a plan for less money. She asks Marjorie about this. Marjorie says that it depends on what people are looking for in a plan.
She explains, “Our most expensive plan is the PPO, and that plan has a lot of freedom and flexibility. You can go straight to a specialist when you need one and there are many doctors you can choose from. With the HMO, you have your care managed by a primary care provider (PCP), who refers you to a specialist when the PCP thinks it is needed. So your PCP manages your care, keeping the insurance company’s costs down, which is one reason it’s cheaper.”
Being able to have a choice about doctors is important to Julia, but so is cost. She understands why the PPO plan is more expensive, because you can choose among more doctors and don’t have to see a PCP. But she is still confused. Why would you pay $50 a month for a plan when there is a free plan option?
Marjorie explains that there are some additional costs, “Both plans have something called a copayment. Each time you get a medical service, you pay the copayment. These plans all have different copayments. Let’s just compare the HMO and PPO plans. The $50 PPO plan requires that you pay $20 every time you get a medical service while the ‘free’ HMO plan requires that you pay $45 for each medical service.”
Julia realizes that if she doesn’t plan on going to the doctor very often, it makes more sense to get the “free” plan. But if she ends up going to the doctor 3 times a month, she’d be paying $45 each time…that’s $135 a month! If she went to the doctor 3 times a month on the PPO plan, she’d be paying the $50 premium, plus $20 for each visit, which adds up to $110 a month. So if she is going to go to the doctor more often, it saves her money to pay a higher premium upfront.
She also learns that the HMO plan has a $500 deductible, which means you have to spend $500 on medical care before the plan will start to help paying for costs.
Marjorie gives her some booklets about the different plans to read through. There are so many different factors. Finally, Julia decides to come up with a list of the things that are most important to her about a health care plan. Because of her disability, she goes to the doctor often for tests and checkups, so she needs a plan where it is affordable to see the doctor often. She also has lived with her disability for years, and has learned a lot about what kind of care she needs, so she would like to be able to see a specialist without a referral. Finally, she can’t afford to spend a total of more than $200 a month on her health care, including premium payments and copayments.
She looks again at each of the plans. She decides that the PPO plan is the best for her, because it will give her the option to see a specialist without a referral; it will make it more affordable to go to the doctor more often; it has no deductible; and it will allow her to keep her monthly health care costs manageable.
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Frequently Asked Questions
How do you get employer-sponsored health coverage?
Employers allow you to sign up for coverage during specific time periods. These periods may be called by different names, such as initial enrollment, open enrollment, or open season. You will have a chance to sign up during the initial enrollment period, and you will also have a chance to enroll later.
If an employer offers health coverage, there are a minimum number of hours an employee is required to work in a week to become and stay eligible for benefits. Employers also usually require employees to have worked for a certain amount of time before they become eligible for benefits.
How much will employer-sponsored health coverage cost and who pays for it?
You may be responsible for no cost, a percentage of the cost, or the amount of the cost of the coverage that is above what the employer agrees to pay.
Employers are supposed to offer plans that cost the employee, for the employee’s policy alone, less than 9.02% of the employee’s family income for the monthly premium. Also, that plan must either be at least at the bronze coverage level or meet the "minimum value" standard (which is about equivalent to a bronze-level plan) for copayment, co-insurance, and deductible expenses.
There is no limit to how much it may cost to add the employee’s family members to the plan. However, at small employers (100 or fewer employees), a family plan premium can only charge you for a maximum of three children under age 21. Any additional children under 21 can be included in the plan without the premium cost going up. The employer's Human Resources department or personnel staff can explain these benefit details.
How do I stay enrolled in employer-sponsored health coverage? How often do I have to reapply?
Employers usually do not require re-enrollment in coverage. You will need to continue to work the minimum number of hours to stay eligible for benefits, called an active work requirement. During the annual open enrollment or open season you can change coverage plans.
Note: Employers may change coverage plans or coverage choices for you without your active participation. If your employer changes insurance companies, you will have to re-enroll.
Can I get coverage under my parent’s insurance?
Yes, if you are under 26, you can be covered under your parent's insurance plan. Employers who offer coverage to their employees must also offer it to their children under the age of 26.
Dependent children with disabilities can continue to be covered under their parent’s plan past age 25. To qualify as a dependent child, you must be dependent on your parents for support and your disability must limit your ability to support yourself through work.
Employers do not have to offer coverage to the spouses of employees.
How long will employer-sponsored group coverage last?
You must meet the active work requirement, pay any portion of the premium you're responsible for, and follow the plan's rules. If you do those things, the coverage will generally last as long as you work for your employer, assuming that the employer continues to offer health coverage.
When coverage ends, you have different options:
- You can switch to the employer-sponsored coverage of your spouse, if your spouse has it.
- You can check out your public and private individual coverage options on Covered California.
- You can continue on the same policy you had from your employer through COBRA. This option may be very expensive and should be viewed as a last resort.
How does employer-sponsored coverage affect my eligibility for other programs?
If you could get affordable employer-sponsored coverage through your employer, you will not be able to get government help through tax subsidies to pay for an individual plan on Covered California.
You will be able to apply for Medi-Cal or buy an individual plan on Covered California, as long as you are willing to pay the full price of the premium on your own. It is possible that in some cases an individual plan on Covered California would be cheaper than getting coverage through your parent’s or spouse’s employer.
What does “affordable” mean when we talk about employer-sponsored coverage?
Affordable in this case means that your employer, your parent’s employer, or your spouse’s employer must offer coverage for you that would cost the employee, for the employee’s policy alone, less than 9.02% of your family’s income for the monthly premium. Also, that coverage must either be at least at the bronze coverage level or meet the "minimum value" standard (which is about equivalent to a bronze-level plan).
If the employee's spouse or children can also be covered, the plan is affordable for them if the premium for the entire family costs less than 9.02% of your family’s income. A plan could be affordable for the employee alone, but not affordable for the rest of your family.
If the plan offered by the employer does not meet these standards, you may qualify for government help through tax subsidies to reduce the premium on an individual plan. Learn more about affordability rules for family members and how it affects eligibility for tax credits on Covered California.
Note: Before 2023, the spouse or children of an employee would not qualify for subsidies on Covered California if the employer offered coverage that was affordable for the employee's policy alone, even if the cost to add the rest of the family wasn't affordable. This was called the "family glitch."
Is there any reason to have both public and private coverage?
Yes. If you have private health coverage, or have access to it, in many cases it makes sense to enroll in both private health coverage and public coverage. With private coverage, you may have a wider pool of doctors and other medical service providers to choose from than with public coverage. However, public coverage might pay for some services that many private plans don’t cover like transportation, private-duty nursing, and Personal Care Assistant (PCA) services.
Furthermore, if you have both at the same time, Medi-Cal may decide it is cost-effective for them to pay your portion of your employer-sponsored health insurance's premium. Read about the Medi-Cal Health Insurance Premium Payment (HIPP) program in DB101’s Medi-Cal article.
What happens if I don’t get any coverage?
It is risky not to have have coverage: you could have an accident at any time and health care is extremely expensive. By having health coverage, you can get health care when you need it.
There is no good excuse for not getting insurance. To find the right health coverage option for you, keep reading the articles in DB101’s Health Coverage section.
Note: It is very important to have health coverage, but starting in 2019 there is no tax penalty if you don't have coverage.
What is the difference between fully insured and self-insured coverage?
Employers in California can offer either fully insured or self-insured plans. With a fully insured plan, an employer purchases insurance for its employees through an insurance company and pays premiums to that company, and the insurance company is responsible for providing the costs of health care, as agreed upon in the policy. Fully insured plans are subject to federal and state regulation.
With a self-insured (or self-funded) plans, an employer sets aside its own funds to cover the costs of employee medical expenses directly, not through an insurance company. To the employee, a self-insured plan may seem to function much like a fully insured plan. However, self-insured plans are subject to different regulations and so may not offer all of the benefits that a fully insured plan must offer.
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Common Pitfalls
Not getting health coverage because you think it will be too expensive
In the past, some people found it impossible to find health coverage that was affordable and met their needs. Now, there should be an option for almost everybody, even if you have a disability. The exact health coverage that will be right for you will depend on things like your family’s income, whether you have access to employer-sponsored coverage, your age, where you live, and whether you have a disability.
If you have the option of employer-sponsored coverage or public health programs like Medicare or Medi-Cal, they are probably your best bet.
If you don’t, you will probably end up getting an individual plan through Covered California and the government may help you pay for that plan. Note: There is no income limit for getting subsidies that help pay individual coverage premiums. (Before 2021, the limit was 400% of FPG for federal subsidies and 600% of FPG for state subsidies.) To get subsidies, you still must meet other eligibility rules and the premium amount you pay depends on your income and your plan.
Note: If you do not have coverage, you may have to pay a tax penalty on your California taxes.
Not understanding the expenses involved with private health coverage
When making decisions about health care coverage and comparing different types of plans, make sure you understand all of the costs of a plan. These costs include:
- Premiums, a monthly amount that has to be paid whether or not you use medical services. If you have employer-sponsored coverage, your employer pays part or all of the premium and you pay whatever the employer doesn’t pay. If you have individual coverage, you pay the entire premium, though the government may help you pay through tax subsidies if your income is low enough.
- Copayments, a set amount you have to pay for a medical visit or service. The exact amount of the copayment depends on the service you get: medications, visits to specialists, lab tests, X-rays, emergency room visits, and other services can all have different copayment amounts.
- Co-insurance, a set percentage of the cost of a visit or service that you must pay.
- A deductible, a set amount of money that you pay out of your own pocket each year before the insurance company will begin to pay for certain services, including hospital care, emergency room visits, and brand-name prescription drugs. Once you have paid the deductible, you do not have to pay it again until the next calendar year.
Getting an individual plan without carefully considering employer-provided coverage or public coverage
If your employer, your parent’s employer, or your spouse’s employer offers you health insurance, in most cases it will be less expensive than if you were to buy an individual plan.
If your employer-sponsored health coverage is affordable and meets a certain benefits level, you won't qualify for government help through tax subsidies to pay for an individual plan on Covered California. That means that if you decide to purchase an individual health plan, you will have to pay the full price, which will likely be more than you would have paid had you used the coverage provided by your employer.
In some cases, a plan will be affordable for the employee, but it will not be affordable to cover the rest of their family. In this situation, it may be cheaper for those family members to buy individual plans through Covered California (and they may qualify for government subsidies). Learn more about affordability rules for family members and how it affects eligibility for tax credits on Covered California.
Note: Before 2023, the spouse or children of an employee would not qualify for subsidies on Covered California if the employer offered coverage that was affordable for the employee's policy alone, even if the cost to add the rest of the family wasn't affordable. This was called the "family glitch."
Believing you have to get the same health coverage for every member of your family
There may be situations where it makes more sense for different members of your family to get health coverage in different ways. Do not feel that just because one member of your family gets a certain plan, the entire family needs to get that plan.
For example, let’s say you work for a company that only offers health coverage for you and your children, but not your spouse. You could take the coverage for yourself and your spouse could get coverage on Covered California. Since your employer doesn’t offer coverage for your spouse, your spouse might even qualify to get government help paying for an individual plan through tax subsidies. If your income is low enough, your children could sign up for Medi-Cal, even if you and your spouse don’t qualify for it.
As you can see, in some situations it can make sense for a single family to get totally different types of coverage for different family members.
Not enrolling in private coverage because you’re on public coverage
If you have public health coverage, in many cases it makes sense to also enroll in private health coverage. With private coverage, you may have a wider pool of doctors and other medical service providers to choose from than with public coverage. However, public coverage might pay for some services that many private plans don’t cover like transportation, private-duty nursing, and Personal Care Assistant (PCA) services.
Furthermore, if you have both at the same time, Medi-Cal may decide it is cost-effective for them to pay your portion of your employer-sponsored health insurance's premium. Read about the Medi-Cal Health Insurance Premium Payment (HIPP) program in DB101’s Medi-Cal article.
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Resources
Learn More
To learn more about employer-sponsored coverage:
- Talk to your employer’s Human Resources department. It will know about the specifics of the health coverage options it offers.
- Talk to a benefits planner about how your disability affects your health coverage.
- Call the California Department of Managed Health Care at 1-888-466-2219 (TTY: 1-877-688-9891) if you have questions about your health plan.
- Read the California Department of Insurance's information about health care reform.
- Look at how interaction between Medicare and private health coverage works in How Medicare works with other insurance.
Getting Help with Your Benefits
If you get Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), or Childhood Disability Benefits (CDB), and you're looking for a job, a trained Benefits Planner can help you avoid problems with your job plan. If you need help or have questions about your situation, you can call the Ticket to Work Help Line at 1-866-968-7842 or 1-866-833-2967 (TTY), Monday through Friday.
View DB101's full list of experts who can help you understand different benefits.
Community-Based Organizations
Various community-based organizations guide people through state, federal, public, and private health and income programs. Some organizations may work with specific populations while others work with people with any type of disability. Here are a few examples
Goodwill Industries services range from personal evaluation and office skills training to career counseling, childcare, and transportation. Some Goodwill Industries centers also do benefits planning for people who get SSI, SSDI, and Medicare. Find locations at www.Goodwill.org, or by calling (voice) 1-800-466-3945.
The California Foundation for Independent Living Centers lists centers serving people with all disabilities. Many of these centers do benefits planning for people who get SSI, SSDI, and Medicare. If they don't offer benefits planning themselves, Independent Living Centers can refer you to local benefits planners. Find the list of independent living centers at www.CFILC.org, or by calling (voice) 1-916-325-1690 or (TTY) 1-916-325-1695.
The California Department of Public Health's Office of AIDS lists 1,300 organizations offering HIV/AIDS services throughout California. Some of these organizations provide case management, benefits planning, and benefits counseling services that can include help with public and private benefits programs. You can search the list online, or call (voice) 1-800-367-AIDS (2437) or (TTY) 1-888-225-AIDS (2437).
Disability Rights California provides representation for consumers of public programs who are disabled. Website publications include topics on health care, benefit programs, and In-Home Supportive Services.