Employer sponsored coverage, and Covered California premium subsidy, consumers be ware!

It has been brought to our attention through various sources that consumers are being misinformed and misled when it comes to qualifying for premium assistance through Covered California. We want to address this issue, as it has the potential for severe consequences.

Employees who are offered coverage through their employer cannot receive subsidy if their employer offers “affordable” coverage. How is “affordable” coverage defined under the Affordable Care Act? To determine if the coverage is “affordable” or not, we look at the employee ONLY monthly rate for health insurance coverage. The cost to add dependents, spouse, children, etc. DOES NOT play a role in this calculation. If the employee only pays less than 9.5% of the gross household income for health insurance, the coverage is deemed “affordable”.

A simple calculation would look like this. Let’s say the gross HOUSEHOLD income is $50,000. 9.5% of the gross family income would be $4750.  So, the EMPLOYEE ONLY would have to pay less than $396 per month ($4750 divided by 12 months equals $396 per month) for the coverage to be “affordable”. It is quite easy for an employer to provide “affordable” coverage. If the EMPLOYEE ONLY pays less than 9.5% of the gross household income on a monthly basis, ALL family members are disqualified from receiving subsidy through Covered California.

However, the children, based on the gross HOUSEHOLD income, may still qualify for Medicaid. Bottom line, if your employer offers you coverage, you need to check and see if it is affordable before looking to Covered California for subsidy. It is quite likely you will NOT be eligible for it.

Call us with questions at 909-792-5100.

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