Can I have ACA insurance along with employer-sponsored insurance?

Is it possible to be covered by both an ACA plan and employer-provided health insurance?

While it is technically possible to be covered by both an ACA health insurance plan and employer-provided health insurance, it is generally not recommended or necessary. Here’s why and what you need to know if you are considering having both types of coverage:

1. ACA and Employer Insurance Overlap

If your employer offers affordable and minimum value health insurance, you will likely not qualify for premium tax credits or other subsidies on an ACA plan. This means that if you decide to purchase an ACA plan, you’ll have to pay the full price for the coverage, which can be costly when combined with the cost of employer-provided insurance.

A. Affordable Coverage

The Affordable Care Act (ACA) defines employer coverage as affordable if your share of the premium for the lowest-cost, self-only plan offered by your employer is 9.83% or less of your household income. If your employer’s plan meets this affordability standard, you won’t be eligible for subsidies to help pay for an ACA plan.

B. Minimum Value Coverage

Employer-provided health insurance must also meet the ACA’s minimum value standard, meaning it covers at least 60% of the total allowed cost of benefits and includes coverage for hospitalization and physician services. If your employer’s plan meets this requirement, it will be considered qualifying coverage.

2. Why You Typically Don’t Need Both

For most people, having both an ACA plan and employer-provided insurance doesn’t make financial or practical sense due to these factors:

A. Higher Costs

• No subsidies for ACA coverage: If you are offered employer insurance that meets the ACA’s affordability and minimum value requirements, you will not be eligible for premium tax credits. This means you’ll pay the full cost of an ACA plan, which can be expensive, especially when you’re also paying premiums for employer-provided insurance.

• Duplicative coverage: Having both plans can lead to overlapping benefits, which doesn’t necessarily improve your coverage but increases your overall costs, including paying multiple premiums, deductibles, and copayments.

B. Primary and Secondary Insurance

If you do have both types of coverage, one plan would be considered primary and the other secondary. Typically, your employer-provided plan would be the primary insurer, meaning it would pay for covered services first, and your ACA plan would act as the secondary payer, covering any remaining costs. However, managing two plans can complicate claims and payments without providing significant extra benefits.

3. When You Might Consider Both

There are rare situations in which having both an ACA plan and employer-provided insurance might be considered:

• Spousal Coverage: If one spouse has employer-provided coverage but it does not extend to the entire family or if the employer’s family plan is expensive, the other spouse may explore an ACA plan for themselves or their children. However, premium tax credits for the ACA plan are generally unavailable if the employer coverage meets affordability standards for the employee.

• Inadequate Employer Coverage: If your employer’s plan is unaffordable (costs more than 9.83% of your household income) or does not meet the minimum value standard, you may qualify for ACA subsidies. In this case, you can decline the employer plan and choose to purchase an ACA plan.

4. How to Choose Between ACA and Employer-Provided Health Insurance

If your employer offers coverage, you should carefully consider whether it makes sense to purchase an ACA plan. Here’s what to keep in mind:

• Cost: Compare the total costs, including premiums, deductibles, and out-of-pocket expenses, between your employer-provided plan and an ACA plan.

• Coverage: Review the benefits of each plan to determine whether your medical needs would be better met by your employer’s plan or an ACA plan.

• Subsidies: If your employer’s plan is considered affordable and meets minimum value standards, you will not be eligible for subsidies in the ACA Marketplace. Without subsidies, an ACA plan can be more expensive.

5. Declining Employer Coverage in Favor of an ACA Plan

If your employer’s plan is too expensive or doesn’t meet your healthcare needs, you can decline it and purchase an ACA plan instead. Keep in mind:

• Subsidy eligibility: You will only be eligible for premium tax credits and cost-sharing reductions if your employer’s coverage is deemed unaffordable or fails to meet the minimum value standard.

Key Takeaways:

• While you can technically have both ACA insurance and employer-provided health insurance, it is typically not cost-effective because you will lose access to ACA subsidies if your employer’s plan meets affordability standards.

• Having two health insurance plans can lead to higher overall costs without significantly improving your coverage.

• If your employer’s plan is unaffordable or doesn’t meet minimum value, you may qualify for ACA subsidies and can purchase an ACA plan instead of the employer plan.

For help comparing your employer’s health plan with ACA options or understanding your subsidy eligibility, schedule an appointment with a Tsunami Advisor here: Schedule an Appointment.