When is Group Health Insurance a Burden To The Employee
The law of unintended consequences seems to be in full effect these days when it comes to California health insurance and it's very prominent in our recent analysis of how group health options will affect employee's insurance costs. We'll try to keep this from spiraling into a complicated explanation but it won't be easy! So, why might an employee not want you to offer group health insurance?
At Play...Health Subsidies
Let's first touch base on the health subsidies available to Californians on the individual family market.
If an individual or family makes under 400% of the Federal Poverty Level (links below for these amounts), they may qualify for large health subsidies towards the purchase of insurance on the Exchange.
We are talking about $1000's of dollars in subsidies per year. There are a few caveats in order to qualify and this is where the group health insurance coverage comes into play.
In most cases, if a person is OFFERED (not necessarily accepting) group health coverage which is deemed both affordable AND meeting the Minimum Value requirements, that employee is not eligible to get subsidies for themselves OR their dependents on the Individual Family Health Exchange.
The dependent's inability to qualify for subsidies is the critical piece that wasn't probably intended with the original law. HHS later came out and clarified that this exclusion would hold. Let's first look at the two requirements for the Group health plans.
What is affordable and minimum value?
Affordable means that an employee cannot be expected to pay more than 9.5% of their income towards their share of the EMPLOYEE only premium.
The Minimum Value designation means that the
plan meets at least the 60% actuarial value
(essentially the Bronze plan level)
requirement.
If the Group health plan meets these two requirements for a given employee, that employee is unable to go to the individual Health exchange and qualify for subsidies.
His or her dependents are also unable to qualify for subsidies unless the group plan does not offer coverage (different from does not pay for) dependent coverage which is extremely rare.
The employee's dependents are left without options
So where does this leave the employee's dependents if eligible group coverage is offered to the Employee? It is an unanticipated loop hole which presents the dependents few good options. Some groups do not pay for dependent coverage or pay less than they would for employee coverage. Even if the family makes less than the 400% of the federal poverty level, the fact that they are offered group coverage makes them in-eligible.
We'll watch to see if this loop hole is addressed as it will affect 1000's of Californians adversely and does not seem to fit the intent of the original Health Reform bill.
Our guess is that the original bill writers did not want groups to encourage their lower wage (under 400% poverty level) to just opt out of the group plan and get subsidies on the individual market.
It may have a similar effect in that the
companies just stop offering group health
insurance so that employees can take advantage
of subsidies. Time will tell but we're happy to
walk through how to best navigate this as either
an employee, dependent, or California company.
You can run your Covered California Plan Quote here to view rates and plans side by side from the major carriers...Free.
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