Can I switch from ACA to an employer plan mid-year?
If I gain access to employer-sponsored health insurance during the year, can I leave my ACA plan?
Yes, if you gain access to employer-sponsored health insurance during the year, you can leave your ACA health plan, but it’s important to understand the timing, process, and implications of making the switch. Here’s what you need to know:
1. Qualifying for a Special Enrollment Period (SEP)
Gaining access to employer-sponsored health insurance is considered a qualifying life event that allows you to make changes to your ACA plan outside of the annual Open Enrollment Period. This event triggers a Special Enrollment Period (SEP), during which you can:
Cancel your ACA plan and switch to your employer-sponsored plan.
Make other adjustments to your health coverage based on your new circumstances.
2. When Can You Cancel Your ACA Plan?
Once you gain access to employer-sponsored coverage, you can cancel your ACA plan:
Within 60 days of gaining coverage through your employer. This is the Special Enrollment Period window that allows you to transition from your ACA plan to your employer’s health insurance plan.
The cancellation can be arranged through the ACA Marketplace, either online or by contacting customer service.
3. How to Cancel Your ACA Plan
To cancel your ACA plan after gaining access to employer-sponsored insurance, follow these steps:
Log in to your ACA Marketplace account: Go to the ACA Marketplace website where you purchased your plan.
Report the life event: Select the option to report that you’ve gained access to employer-sponsored coverage.
Cancel your plan: Choose the option to cancel your ACA plan. You can select the date when you want your coverage to end, ensuring there is no gap in coverage between your ACA plan and your new employer-sponsored insurance.
Make sure to coordinate the timing of your coverage switch to avoid any gaps in coverage. Your new employer-sponsored plan will usually begin on the first day of the month after you enroll.
4. Financial Considerations: Losing ACA Subsidies
Once you become eligible for employer-sponsored health insurance, you will likely lose eligibility for the premium tax credits and other subsidies that help lower the cost of your ACA plan. This means that even if you stay on your ACA plan, you may no longer receive financial assistance, making the ACA plan more expensive than your employer’s plan.
Affordable coverage: If your employer’s plan is considered affordable (costs less than 9.83% of your household income for self-only coverage) and meets the minimum value standard, you are no longer eligible for ACA subsidies.
Full cost of ACA plan: Without subsidies, you will need to pay the full premium for your ACA plan if you decide not to cancel it.
5. What If You Prefer Your ACA Plan?
In some cases, you may prefer to keep your ACA plan instead of switching to employer-sponsored insurance, especially if your employer’s plan doesn’t meet your healthcare needs. However, keep in mind:
You can keep your ACA plan, but you’ll lose access to premium tax credits, meaning you’ll pay the full cost of the plan.
Your employer-sponsored plan will become your primary coverage option.
6. Switching Mid-Year: How It Affects Your Out-of-Pocket Maximum
If you switch from an ACA plan to employer-sponsored insurance mid-year, keep in mind that deductibles and out-of-pocket maximums do not carry over between the two plans. This means:
You will need to start over with a new deductible and out-of-pocket maximum under your employer’s plan, even if you’ve already met or paid toward those amounts on your ACA plan.
7. Coverage for Dependents
If you have dependents covered by your ACA plan, and you gain access to employer-sponsored insurance, you can:
Add dependents to your employer-sponsored plan, if allowed by your employer, during your Special Enrollment Period.
If your employer’s family coverage is expensive, your dependents may still qualify for premium tax credits in the ACA Marketplace, even if you don’t. This is known as the family glitch, where only the employee’s coverage is considered in the affordability calculation.
8. How to Compare Plans Before Switching
Before deciding to switch from an ACA plan to employer-sponsored coverage, it’s important to compare the two options:
Premiums: Compare the monthly cost of each plan, factoring in the loss of subsidies for the ACA plan.
Deductibles and copayments: Review the cost-sharing requirements, including deductibles, copayments, and coinsurance for each plan.
Network of doctors and hospitals: Ensure your preferred healthcare providers are in-network for your employer’s plan.
Prescription drug coverage: Compare the costs and coverage for medications that are important to your health.
Key Takeaways:
If you gain access to employer-sponsored health insurance during the year, you can cancel your ACA plan during a Special Enrollment Period.
Once you become eligible for employer-sponsored coverage, you may lose your ACA subsidies, making the ACA plan more expensive.
You can switch to your employer’s plan but will need to reset your deductibles and out-of-pocket maximums.
For personalized assistance with transitioning from an ACA plan to employer-sponsored health insurance, schedule an appointment with a Tsunami Advisor here: Schedule an Appointment.
