Many clients fear changes to their health insurance when they have to relinquish employer benefits. Although there are some differences between employer/group and Marketplace coverage, there are usually more similarities than people think. Take a look at the characteristics of both summarized in the table below:
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Costs are often the first thought that crosses one’s mind. When you are enrolled through your employer – commonly called a ‘group plan’ – the premium cost is often split between your employer and you. When you enroll in an individual plan through the marketplace, you are responsible for the full cost of the plan. You may be eligible for a subsidy from the federal government that is based on your income, zip code, and household size. This subsidy will lower your monthly premium by a certain amount for the calendar year. However, if your employer offers insurance and you choose not to enroll in the group coverage, you will have to pay the full price for the individual Marketplace plan (ie. you cannot access premium subsidies through the government). The only exception is when your employer plan does not meet the minimum standards for affordability and coverage.
The portion of the monthly premium that the employer pays for your coverage is not subject to federal taxes. What you pay for your health insurance coverage each pay period may be made pre-tax, which would lower your taxable income.
One difference you may find when you transition from employer benefits to the individual marketplace is that the deductible and out-of-pocket maximums may be higher than you are used to. Considering how much healthcare you typically use in a year can help with individual plan decisions.
Plan choice is also another area of concern. When you enroll with your employer, your plan options may be limited to one or two insurance companies and are chosen by the employer. When you enroll in a plan through the Marketplace, you will be able to browse through plans from all available insurers offered in your zip code – typically there are dozens of plans. Additionally, dental and vision benefits are often included as part of your employee benefits package. These benefits may need to be purchased separately if you seek coverage through your state’s Marketplace.
Now that you are ready to make the transition, be sure to confirm your open enrollment period, which may vary by state. If you lose coverage through your job and have a notice of coverage termination, you may be eligible for a special enrollment period, which begins as early as 60 days before your qualifying life event and ends 60 days after your qualifying life event. You may also be eligible to elect to continue your employer benefits for 18 months through COBRA*. Under COBRA benefits, however, your employer no longer contributes financially to the cost of your premium, so expect that your costs will be higher than what was deducted from your paycheck when you were employed.
Keep your COBRA letter to keep track of the start date and expiration date
Last Revised March 1st, 2023