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What If I Don’t Like The Coverage Offered By My Employer?

Consumer columnist Michelle Andrews outlines the health insurance options for people offered coverage at work. A transcript follows.

Q: In 2014, can an individual with employer-sponsored health insurance drop that coverage and then either get coverage through a state exchange or just go without insurance and pay the individual mandate penalty?

A: Starting in 2014, most people can buy health insurance on the state exchanges, and people with incomes up to 400 percent of the federal poverty level may qualify for premium tax credits to make coverage more affordable. But not everyone will qualify for this subsidized coverage. If your employer offers job-based insurance and you choose to buy a plan on the exchange instead you generally won’t qualify for subsidies unless your employer coverage is considered to be either unaffordable or inadequate. Your employer coverage would be considered unaffordable if the premium for individual coverage costs more than 9.5 percent of your income. It would be considered inadequate if it doesn’t cover at least 60 percent of your allowed medical costs. If you choose, you can skip having insurance altogether but, as you noted, if you do you’ll owe a penalty. In 2014, the penalty for not having health insurance will be either $95 or 1 percent of your household income, whichever is greater. The penalty will gradually increase until in 2016 it reaches the greater of $695 or 2.5 percent of your income. But consider your decision carefully. If you decide not to buy insurance during the open enrollment period that started this fall and continues through next March, if you get sick and change your mind you won’t be able to buy a policy through the state exchanges until the next open enrollment period. There are some exceptions to that, but generally you would have to wait.

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