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Does my employer have to offer health coverage?

The health reform law’s so-called “employer mandate” requiring some companies to offer health coverage was supposed to start this year, but the President Obama administration pushed it back while it figured out how to implement it. But as of Jan. 1, 2015, the mandate goes mostly into effect.  

Which employers are covered by the mandate?

Any that have more than 100 full-time employees. This includes not only regular businesses, but also nonprofits, educational institutions, and government agencies—basically anyplace where a person can work.

The health reform law says that the mandate applies to employers with 50 or more full-time employees, but the administration is giving employers with between 50 and 100 employees another year to get their act together.

Who is considered a full-time worker?

Anyone who works 30 hours a week or more. There are special rules for people with irregular or seasonal hours, which we’ll talk about in a later post.

How does the mandate work?

The mandate actually comes in two parts, which together hopefully will guarantee that employees have access to semi-decent health insurance.

Part 1: Employers are given a choice. They can either offer their employees health insurance or pay the government a $2,000 “shared responsibility” fee for every full-time employee beyond the first 30. To comply with this rule, insurance can be pretty minimal. The only thing it absolutely has to cover is preventive care with no out-of-pocket costs for the employee. It doesn’t even have to cover sick care, such as doctor visits or hospitalization.

Part 2: This is the part that will prevent most employers from offering such bare-bones coverage. It says that if they don’t offer employees a plan with “minimum value” that’s “affordable,” the employees have the option of turning it down and buying coverage on their state Health Insurance Marketplace. And if they qualify for a tax credit subsidy on the marketplace (which many if not most likely will), their employer will have to pay the government $3,000 for every employee who gets the subsidy.

What counts as a “minimum value” and “affordable” plan?

It’s “minimum value” if it covers at least 60 percent of the average member’s health care costs. And it’s “affordable” if the employee doesn’t have to pay more than 9.56 percent of his or her household income for solo coverage. Here’s more information on how to figure out if your employer plan meets these standards.

Does the plan have to cover spouses and kids?

Employers who offer health coverage have to make it available to children up to the age of 26. But they don’t have to offer coverage for spouses.

Will my employer be penalized if I don’t take the coverage?

No. It's enough for them to offer it. There are plenty of reasons why employees don’t accept their workplace health plan. They might have coverage from some other source, like a spouse’s plan. Or they just might decide they don’t want health insurance (bad decision, in our opinion).

One thing you probably can't do, though, is turn it down and go to the Marketplace and buy a plan with a subsidy. That is because if your plan is "minimum value" and "affordable," you can't get a tax credit on the Marketplace no matter what your income is.

What if my household income is so low that we qualify for Medicaid and/or CHIP?

In that case, you can turn down your employer plan and enroll in these free or very low-cost government-sponsored health programs. Your employer won't be penalized if you do.

What’s to stop employers from dropping health coverage and just paying the $2,000?

Nothing. But remember, the vast majority of large employers have been offering health coverage all along even though there was no law saying they had to.  A recent survey by Mercer, a big benefits consulting firm, found that only 4 percent of companies with 500 or more employees expected to drop their health plans within the next five years.

Does this mean smaller employers can’t offer health coverage?

Not at all! But smaller employers won’t be penalized financially if they don’t.

-- Nancy Metcalf

See our complete health insurance information. To find out how to apply for, select, and use health insurance, including Medicare, visit our main health insurance page.

Submit a question to Consumer Reports' health insurance expert. Be sure to include the state you live in so we can provide a more-detailed answer.



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