Can I qualify for ACA coverage if I already have employer insurance?
Is it possible to get an ACA plan if I’m already covered by an employer-sponsored health plan?
Yes, it is possible to get a health insurance plan through the ACA Marketplace even if you are already covered by an employer-sponsored health plan, but there are some important factors to consider before making the switch. In many cases, whether you can qualify for premium tax credits and other financial assistance in the Marketplace depends on whether your employer's plan is considered affordable and provides minimum value.
Here’s what you need to know:
1. Can You Drop Employer-Sponsored Coverage and Buy an ACA Plan?
You are legally allowed to drop your employer-sponsored health insurance and purchase an ACA Marketplace plan instead.
However, the main factor that determines whether it’s beneficial to switch is whether your employer’s health plan is affordable and provides minimum value according to ACA standards.
2. Affordability and Minimum Value Standards
If your employer offers coverage that is considered affordable and meets the minimum value standards set by the ACA, you may not be eligible for premium tax credits or other financial assistance in the Marketplace. Let’s break these terms down:
A. Affordability:
Employer-sponsored coverage is considered affordable if your share of the premium for the lowest-cost self-only plan offered by your employer is 9.12% or less of your household income in 2024.
It’s important to note that this affordability test is based on the cost of coverage for just you, even if you plan to cover other family members under the plan. This can sometimes result in what is known as the family glitch, where your coverage is deemed affordable, but covering your whole family may be significantly more expensive.
B. Minimum Value:
An employer’s health plan must meet the minimum value standard, meaning the plan must cover at least 60% of the total allowed cost of medical services.
Most employer plans meet the minimum value requirement, but you can check with your HR department or benefits administrator to confirm.
3. Can You Get Premium Tax Credits If You Have Employer Coverage?
If your employer-sponsored plan is affordable and provides minimum value, you can still buy an ACA Marketplace plan, but you won’t qualify for premium tax credits or cost-sharing reductions to help lower your monthly premiums or out-of-pocket costs.
If your employer’s plan is not affordable or does not meet minimum value standards, you may be eligible for premium tax credits and financial assistance in the Marketplace. In this case, switching to an ACA plan might be a more affordable option.
4. Special Considerations for Family Members
If you have family members who are not covered by your employer’s plan or if the employer-sponsored family plan is unaffordable, they may qualify for premium tax credits and other financial assistance in the Marketplace.
Family members may be able to get separate coverage through the ACA Marketplace, while you stay on your employer-sponsored plan.
5. When You Can Switch to an ACA Plan
You can switch to an ACA plan during the Open Enrollment Period or if you qualify for a Special Enrollment Period (SEP). Open Enrollment typically runs from November 1 to January 15, but specific dates may vary by year.
Special Enrollment Periods are available outside of Open Enrollment if you experience a qualifying life event, such as losing your employer-sponsored coverage, moving, or a change in household size.
6. Steps to Switching from Employer-Sponsored Coverage to an ACA Plan
If you decide to drop your employer-sponsored coverage and enroll in an ACA Marketplace plan, here’s what you need to do:
Check the affordability of your employer’s plan: Contact your employer or HR department to get the details of your current coverage, including the cost of self-only coverage and whether the plan meets minimum value standards.
Apply for an ACA plan through tsunamihealth.com: You can apply online, over the phone, or by mail. Provide information about your current coverage, household size, and income to determine if you qualify for premium tax credits.
Review your options: Compare the costs, coverage, and benefits of Marketplace plans versus your employer’s plan. Be sure to look at both monthly premiums and out-of-pocket costs (deductibles, copayments, coinsurance).
Cancel your employer-sponsored plan: If you decide to switch to an ACA plan, notify your employer that you are dropping their health coverage. Make sure your ACA plan begins as soon as your employer-sponsored coverage ends to avoid any gaps in coverage.
7. What to Consider Before Switching
Before making the decision to switch from an employer-sponsored plan to an ACA Marketplace plan, consider the following:
Cost comparison: Compare the cost of your employer-sponsored coverage with the premiums and out-of-pocket costs of an ACA plan. Take into account whether you qualify for premium tax credits or other financial assistance.
Network and provider availability: ACA plans may have different provider networks than your employer’s plan. Check to see if your preferred doctors, specialists, and hospitals are covered under the ACA plan.
Coverage for family members: If your employer’s family coverage is unaffordable, your spouse and dependents may be eligible for subsidized ACA coverage, even if you remain on your employer’s plan.
Key Takeaways:
You can drop your employer-sponsored health insurance and purchase an ACA Marketplace plan, but you may not qualify for premium tax credits unless your employer's plan is considered unaffordable or doesn't meet minimum value standards.
If you qualify for financial assistance, switching to an ACA plan could lower your monthly premiums and out-of-pocket costs.
You can switch during the Open Enrollment Period or a Special Enrollment Period if you experience a qualifying life event.
For personalized guidance on whether switching to an ACA plan makes sense for your situation, schedule an appointment with a Tsunami Advisor here: Schedule an Appointment.
