Navigating Job-Based Insurance and Marketplace Plans

If you currently have job-based health insurance or receive an offer for it, here's what you need to know about your options and potential savings through the Health Insurance Marketplace®.

Job-Based Insurance and Marketplace Savings

If your job-based insurance is considered affordable and meets minimum standards, you won’t qualify for savings on a Marketplace plan. Most employer-provided plans meet these criteria.

Switching from Job-Based Coverage to a Marketplace Plan

You might be able to switch to a Marketplace plan even if you have job-based coverage. However, you likely won’t qualify for premium tax credits or other savings. It’s safe to apply to see if you qualify, but keep in mind that applying doesn’t automatically change your coverage—you can still choose to stay with your job-based plan.

Steps to Consider When Choosing Between Marketplace and Job-Based Insurance

• Evaluate Costs and Coverage: Compare the cost, coverage, and benefits of your job-based plan with those available through the Marketplace.
• Check Eligibility for Savings: If you apply for a Marketplace plan, you may not be eligible for savings if your job-based plan is affordable and meets the minimum standards.

Canceling a Marketplace Plan When Offered Job-Based Insurance

If you currently have a Marketplace plan and receive a job-based insurance offer, your eligibility for savings through the Marketplace may change—even if you don’t accept the job-based coverage.

• If You Haven’t Accepted the Job-Based Offer Yet: Update your Marketplace application to see how the offer affects your eligibility for savings. If you or your household still qualify for savings, you might consider keeping your Marketplace coverage. Make sure to get all the details before making a decision.

• If You’ve Already Accepted the Job-Based Offer: Consider canceling your Marketplace plan for yourself and any household members who are eligible for the new job-based coverage. You won’t qualify for savings if you’re enrolled in a job-based plan. Learn how to cancel your Marketplace plan to avoid paying for duplicate coverage.

Additional Resources

• Options if You Lose Your Job-Based Insurance: Explore COBRA coverage and how it compares to Marketplace options.
• Understanding Flexible Savings Accounts (FSAs): Learn about the rules that apply to FSAs under job-based health insurance.

Carefully weighing your options can help you make the best choice for your health coverage and finances.

Deciding Between Job-Based and Marketplace Health Coverage

When choosing between job-based health insurance and a Marketplace plan, follow these steps to make an informed decision:

1. Consider Before Declining Job-Based Insurance

• Employer Contribution: Most employers contribute to a portion of your monthly health insurance premium. If you opt for a Marketplace plan instead, your employer won’t contribute to your premium costs.
• Eligibility for Savings: Even if your income qualifies you for savings, you may not be eligible for premium tax credits or extra savings on a Marketplace plan if your job-based insurance meets certain minimum standards. These standards include affordability and basic coverage levels, which most job-based plans satisfy.
• Affordability Check: When you apply for Marketplace coverage, the system will check whether your job-based insurance is considered affordable for you and your household.

2. Gather Information About Your Job-Based Insurance

• Review Documentation: Collect any documents that detail the cost of premiums and the coverage options available through your employer. This information might be available in an online employee portal, or it could come from a letter, email, or other communication from your employer.
• Employer Coverage Tool: You can ask your employer to complete the Employer Coverage Tool, which provides essential information needed when applying for Marketplace coverage.

3. Apply for Marketplace Coverage to Check for Savings

• Submit Your Application: Use the information from the Employer Coverage Tool when filling out your Marketplace application. The application process will determine if you and your household qualify for any savings, even if you were previously ineligible.
• Understand Savings Eligibility: You won’t qualify for savings during any month when:
  • You have an offer of job-based coverage that’s deemed affordable and meets minimum standards.
  • You’re enrolled in job-based coverage.
• If Job-Based Coverage Isn’t Affordable: You and your household may qualify for savings on a Marketplace plan.

4. Compare Marketplace Plans with Your Job-Based Plan

• Evaluate Your Options: Log in to the Marketplace to compare available plans in your area. Review the costs and coverage options based on any savings for which you qualify, and weigh them against your employer’s plan to determine which best suits your needs and budget.

5. Make Your Decision

• If You Choose a Marketplace Plan:
  • Generally, you can enroll during the Open Enrollment period (November 1 - January 15). If your employer’s enrollment period is different or if you newly qualify for savings, you may be eligible for a Special Enrollment Period.
  • Learn more about Special Enrollment Periods.
• If You Choose Job-Based Coverage:
  • Accept your employer’s offer by their specified deadline or find out when you can enroll in their health plan.
  • If you’re currently enrolled in a Marketplace plan, ensure you cancel it to avoid overlapping coverage.

Important Notices:

• Legal Protections: It is illegal for your employer to fire or retaliate against you if you:
  • Receive a premium tax credit for a Marketplace plan.
  • Report violations of the Affordable Care Act to your employer or the government.
  • For more information, review these protections.

By carefully considering these steps, you can choose the health coverage that best fits your circumstances.

What to Do If You Lose Job-Based Health Insurance

If you lose your job-based health insurance, you have two primary options:

Option 1: Enroll in a Marketplace Plan

If you lose your job-based health insurance, whether due to resignation, termination, or other reasons, you can enroll in a Health Insurance Marketplace® plan. You will qualify for a Special Enrollment Period, allowing you to secure coverage for the remainder of the year.

• Enrollment Window: Apply for Marketplace coverage within 60 days of losing your job-based insurance. Your new coverage will begin on the first day of the month following your loss of coverage.
• Potential Savings: When applying, you’ll learn if you qualify for:
  • Premium tax credits: Savings on your monthly premiums based on your income.
  • Medicaid or CHIP: Free or low-cost coverage for eligible individuals or families.

To explore your options, create an account to apply at any time, and preview available plans and estimated costs based on your income.

Option 2: Sign Up for COBRA Coverage

COBRA continuation coverage allows you to maintain your job-based health insurance for a limited period (typically 18 months) after your employment ends. With COBRA, you pay the full premium, plus a small administrative fee.

• Next Steps: Contact your employer to understand your COBRA options. If you’ve already enrolled in COBRA, you may be able to switch to a Marketplace plan. For more information, consult the Department of Labor.

Additional Considerations

1. Can a Marketplace plan start the same day I lose my job-based insurance?
No. Marketplace plans begin on the first day of the month after your job-based insurance ends. For instance, if your coverage ends on March 7 and you enroll in a Marketplace plan by March 31, your new coverage will start on April 1.

2. Do I need proof that I lost job-based insurance?
Yes, you may need to provide proof of your coverage loss. After applying for Marketplace coverage, you will receive an eligibility notice detailing whether you need to submit documents. The Marketplace may also contact you directly.

3. Does my income from earlier in the year count when applying for a Marketplace plan?
Yes. Your eligibility for savings is based on your estimated annual income for your entire tax household.

4. What if I can enroll in my spouse’s plan after losing my job-based insurance?
You can still choose a Marketplace plan, but if your spouse’s job-based insurance is considered affordable, you won’t qualify for premium tax credits or other savings.

5. What if I have a waiting period before enrolling in a new job-based insurance plan?
You can enroll in a Marketplace plan to cover the gap until your new insurance starts. You’ll qualify for savings based on your income during this period. Once your new job-based coverage begins, you can keep the Marketplace plan, but you’ll pay full price. You can cancel your Marketplace plan at any time without penalty.

6. What if my new job doesn’t offer health insurance?
If you don’t have access to qualifying health coverage through a new job, you can enroll in a Marketplace plan and may be eligible for premium tax credits and other savings based on your income.

Utilizing a Flexible Spending Account (FSA)

If your health insurance is through your employer, you can take advantage of a Flexible Spending Account (FSA) to cover various healthcare expenses such as deductibles, copayments, coinsurance, and certain prescription drugs. Additionally, FSAs offer the benefit of reducing your taxable income.

How Flexible Spending Accounts Work

A Flexible Spending Account (FSA), also known as a "flexible spending arrangement," is a special account where you can set aside pre-tax dollars to pay for specific out-of-pocket healthcare costs. Since you don’t pay taxes on the money allocated to your FSA, it effectively lowers your taxable income, resulting in tax savings.

• Employer Contributions: While employers may contribute to your FSA, it is not mandatory.
• Reimbursement Process: To access your FSA funds, submit a claim through your employer, along with proof of the medical expense and confirmation that it hasn’t been covered by your health plan. You’ll then be reimbursed for your out-of-pocket costs. For detailed instructions on how to use your FSA, consult your employer.

Key Facts About FSAs

• Contribution Limits: FSAs are typically capped at $3,200 per year, per employer. If you are married, your spouse can also contribute up to $3,200 to an FSA through their employer.
• Eligible Expenses: FSA funds can be used to pay for medical and dental expenses for yourself, your spouse, and your dependents. This includes expenses like deductibles and copayments, though not insurance premiums. FSAs can also cover the cost of prescription medications and over-the-counter drugs with a doctor’s prescription. Insulin is reimbursable without a prescription.
• Medical Supplies: FSAs may be used to purchase medical equipment such as crutches, supplies like bandages, and diagnostic devices like blood sugar test kits. For a complete list of eligible medical and dental expenses, refer to the IRS guidelines.

Important Considerations

• FSA and Marketplace Plans: FSAs are not compatible with Marketplace health plans. Instead, those with high-deductible Marketplace plans can use a Health Savings Account (HSA), which similarly allows pre-tax contributions for healthcare expenses. Learn more about HSAs for detailed information.

FSA Limits, Grace Periods, and Carry-Over Options

• Use-It-Or-Lose-It Rule: Generally, the funds in your FSA must be used within the plan year. However, your employer may offer one of the following options:
  1. Grace Period: An additional 2.5 months to use the remaining funds in your FSA.
  2. Carry-Over: The ability to carry over up to $640 to use in the following year.
  Note that your employer is not required to offer either of these options and can choose to provide one but not both.

Planning Ahead

To avoid losing any unused FSA funds at the end of the year or grace period, carefully estimate your annual healthcare expenses. Only allocate what you expect to spend on eligible costs such as copayments, coinsurance, medications, and other permitted healthcare expenses.

For more information, contact your employer or review the IRS guidelines on FSAs