What Is Affordable Coverage?

Kelley-Jensen2Author: Kelley Filice Jensen

I keep hearing that my employer needs to provide affordable health coverage, and if not, I am eligible to buy an individual health insurance plan and apply for subsidy (premium assistance credit).  How is affordability determined and who determines it?

Is my employer required to offer me health insurance or not?  I have heard conflicting information and I do not know where to look for health insurance or if I am eligible to apply for subsidy (premium assistance credit).  How is affordability determined and who determines it?

First, there is a portion of Obamacare referred to as the employer mandate that will require employers with more than 50 full time employees to offer affordable health coverage or pay a penalty.  This portion of the law was supposed to go into effect January 1, 2014, but the mandate was delayed one year, so it will now go into effect January 1, 2015.

So in 2015, the answer to your first question is:  if you work more than 30 hours http://blog.eindividualhealth.com/health-insurance/health-insurance-when-working-for-a-temp-agency a week for an employer with more than 50 full time employees, your employer will be required to offer you affordable health insurance.

Next, let’s address the concept of affordable health coverage.  Understand that when you get health insurance through work, your company usually pays a portion of your health insurance premiums and you pay a portion of them.  Very few companies pay 100% of the cost of health insurance premiums.  http://blog.eindividualhealth.com/health-insurance/health-insurance-101-%e2%80%93-common-insurance-terms So, what you pay for monthly premiums is the starting point in determining affordability.

Affordable coverage is defined in the new law by an employee’s share of monthly health insurance premiums.    The amount that an employee would pay for the lowest-cost self-only coverage cannot be more than 9.5% of the employee’s W-2 wages, as reported on Box 1; or cannot be more than the hourly rate of pay for each employee, multiplied by 130 and then multiplied by 9.5%; or does not exceed 9.5% of the Federal Poverty Level. http://blog.eindividualhealth.com/health-insurance/2013-health-care-reform-update-what-to-know-this-year

Also, note that:

This calculation of affordability applies ONLY to the employee.  Dependents http://blog.eindividualhealth.com/health-insurance/who-is-a-%e2%80%9cdependent%e2%80%9d-for-health-insurance-plans  and spouses do not go into the calculation.  So, if you have your family on your work’s health plan, and you are paying the premiums for them, you may be paying more than 9.5% of your wages.

The calculation is based on the lowest health plan option offered by your employer, not the one you have actually chosen.  Most employers offer a few different health plan options for employees to choose from, each with different monthly premiums.

So in 2014, if you do not have health insurance through work, you will need to buy an individual health plan to comply with the individual mandate in 2014, http://blog.eindividualhealth.com/health-insurance/health-care-reform-the-what-who-where-when-how-and-why-of-the-individual-penalty .  The good news is, you may be entitled to subsidies through Covered CA, http://www.covered-california.net/#!/  or your state’s exchange.


What type of plan is best for you?  Start by answering these questions.  http://blog.eindividualhealth.com/health-insurance/shopping-for-health-insurance-10-questions-you-need-to-answer-update

And, click here for more information about how to buy affordable health insurance in 2014. http://blog.eindividualhealth.com/health-insurance/how-to-buy-affordable-health-insurance-in-2014


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