Is Employer-Sponsored Coverage Right for You?

To get private health insurance, a premium must be paid every month. Many employers offer to pay part, or all, of this monthly premium as a job benefit for employees, their children until they turn 26 years old, and their spouses. Employer-sponsored health coverage is the most common type of coverage in the U.S.

Answer the questions on this page to see if you might be able to get employer-sponsored coverage. If you can, you probably should because you won’t qualify for subsidized individual coverage.

Can You Get Medicaid?

If you qualify for Medicaid, it will always be your best choice, even if you can get health insurance from an employer. That’s because Medicaid usually has no monthly premium and the copayments for services are usually much lower than copayments required by employer-sponsored plans. Also, Medicaid may cover some services that employer-sponsored coverage does not pay for.

If you can’t get Medicaid, employer-sponsored coverage might be a good option for you.

You may qualify for Medicaid if you are in one of these situations:

Does Your Employer, Your Spouse’s Employer, or Your Parent’s Employer Offer Coverage?

Many employers offer health coverage as a job benefit, but they are not required to. Contact your employer’s Human Resources department to check what benefits are offered.

If an employer offers health coverage as a job benefit for employees, the employer also has to offer the same health coverage to the employees’ children until they turn 26. An employer may also let the employee’s spouse join the plan, but they are not legally required to do so.

If your employer, your parent’s employer, or your spouse’s employer offers health coverage, it might be a good option for you.

Can You Get the Coverage Your Employer Offers?

Employers offer health coverage for employees and their families only if their employees meet certain requirements, such as:

  • The employee must work a certain number of hours each week (called the active work requirement).
    • Example: Your wife’s employer only gives health benefits to employees who work 30 or more hours per week.
  • The employee must have worked for the employer for a certain amount of time (called the waiting period). A waiting period cannot be longer than 90 days.
    • Example: Your father’s employer offers health coverage to employees who have worked there for at least 90 days.
  • You must sign up during open enrollment.
    • Example: After you are hired, you have to sign up for your employer-sponsored coverage during your first month on the job. If you don’t, you have to wait until the next open enrollment period to sign up for coverage.

If your employer, your parent’s employer, or your spouse’s employer offers coverage and you can get that coverage, you probably should.

If an employer offers “affordable” coverage, you cannot get subsidies for an individual plan

If your employer, your parent’s employer, or your spouse’s employer offers coverage that will cost the employee, for the employee’s policy alone, less than 9.5% of your family’s income and that coverage meets bronze-level standards, you will not qualify for government help through tax subsidies to reduce the premium on an individual plan.

The coverage an employer offers must meet affordability standards for employees, but not for their family members. It may be very expensive for family members to join an employer-sponsored health plan. Even so, anybody who could get employer-sponsored coverage, even if it is not affordable for the family member, will not qualify for tax subsidies.

Getting Medicare and Employer-Sponsored Coverage at the Same Time

If you get Medicare and also have employer-sponsored coverage, you should learn how your benefits work together.

If you get Original Medicare coverage, you can get Medicare Part A, which usually has no monthly premium, and both Parts B and D, which do have monthly premiums.

However, if you tell Medicare that you have private coverage that covers the same things Parts B and D cover, you can choose not to get them. This can let you avoid paying their premiums. You can always sign up for Parts B and D later without paying a penalty as long as your private coverage is considered creditable by Medicare.

To find out if your employer-sponsored coverage is creditable and how your coverage would interact with Medicare, you should talk to your employer’s Human Resources department.

Learn more about Medicare.

How to Sign Up

Talk to the employer’s Human Resources department to learn how to sign up. An employer may offer more than one plan. Every option must cover the Essential Health Benefits, but usually there are other trade-offs between plans. For example, one plan may require you to pay a higher monthly premium, while another may require you to pay higher copayments when you visit a doctor.

Sign up for coverage when it is first offered; otherwise, you may have to wait until the annual open enrollment period, which is usually near the end of the year. Certain changes in family or coverage status may trigger a special enrollment period. For example, if you get married or have a child, your new spouse or baby will be able to sign up with your employer-sponsored coverage without waiting until open enrollment.

If You Have to Stop Working Temporarily

In certain situations, you may be able to leave your job for a while, but keep getting your employer-sponsored coverage until you return to work.

If you work for any government agency or for a private employer with 50 or more employees, the Family and Medical Leave Act (FMLA) lets you take up to 12 weeks of unpaid leave per year for certain family and medical reasons, such as the birth of a child or to care for a sick family member. During this leave, your employer must continue to offer the same health coverage at the same cost as you would get while working. Learn more about the FMLA.

If you serve in the uniformed services, the Uniformed Services Employment and Reemployment Rights Act (USERRA) protects your job and health coverage for up to 24 months while you are serving. Learn more about USERRA.

COBRA

COBRA lets most employees and family members keep getting the same health plan they got through an employer after losing employer-sponsored coverage.

The amount of time you can keep getting coverage through COBRA depends on your situation. No matter what though, you will have to pay the entire premium for COBRA, including any amount that your employer paid in the past. Your plan could be a lot more expensive than you realize.

COBRA used to be really important because it was so hard for individuals, especially people with disabilities, to get an individual insurance plan. Now, Healthcare.gov makes that much easier and often much cheaper. That said, there are times when COBRA might make sense, like if you’ve already paid the full deductible or out-of-pocket maximum for the year with your employer-sponsored coverage.

The bottom line: Do not sign up for COBRA without comparing it with your other options.

Learn more about COBRA.