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Employer-Sponsored Health Coverage

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    Employer-Sponsored Health Coverage

    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:

    • 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.
    • 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.
    • 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.

    Employer-sponsored coverage and eligibility for tax credits on Covered California

    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 8.39% 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 8.39% 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 8.39% 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 8.39% 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 8.39% 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) ($20,783 for an individual; $43,056 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 ($82,992 per year for a family of four).
    • You are pregnant, and your family’s income is at or below 213% of FPL ($43,537 if you are single and pregnant with your first child, $66,456 per year for a family of four, including the baby).
    • You have a disability or are elderly:
    Health Coverage Income Limits for Your Family

    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.

    Example

    Nelson is a single father living on his own with his two daughters. He makes $21 an hour repairing shoes and works 30 hours a week, so he makes a total of about $2,700 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.

    Who pays when you have more than one health coverage

    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.

    Learn more

    Buying Health Coverage on CoveredCA

    You can get private health coverage on CoveredCA. The government may help you pay for it.

    Medi-Cal

    Medi-Cal covers people with and without disabilities who have low income.

    Medicare

    Medicare is public health coverage for people with disabilities and seniors.