Is it better to cover dependents through my firm's health plan or through the Exchange?
You may get questions from your employees asking whether it is better to cover their dependents through the Exchange vs. the health plan at work.
As an Employer, you are not able to evaluate this for each of your employees. The cost of coverage within the Exchange is based on household income--information you don't have. Even if you did have income information for an employee, evaluating which scenario is better would require a comparison of the plans offered on the Exchange and the plans offered by your firm.
When an employee asks you what is better, here are some things you can tell them:
- Because we offer affordable coverage to our employees, you (the employee) cannot waive our plan and obtain premium assistance in the Exchange (Marketplace).
- The cost of coverage for your dependents within the Exchange is based on your household income and the extent to which you receive assistance from the government is determined when you apply and answer the income and demographic questions at www.coveredca.com
- Should you purchase coverage in the Exchange, you will want to update them of any changes to your household income, as it is linked to the ongoing cost of your coverage. Failure to report an increase of income could result in a future recalculation/reversal of the advance premium tax credit (government subsidy, if applicable) when you file a future tax return.
- Any coverage you purchase in the Exchange is paid with After Tax Dollars. Your employer cannot assist you with the cost of dependent coverage within the Exchange.
- At work, the cost of coverage for your dependents is pre-Federal and CA State payroll taxes. For most CA employees in our industry, this represents a 25-30% savings.
- If you (employer) pay any percentage of dependent premium, this should be noted, as this is equivalent to subsidizing coverage.
For example, if the firm pays 20% of dependent coverage, this means we are lowering the cost of coverage for your dependents by that percentage.
"Is it better to insure your dependents in the Exchange", will depend on:
- The amount of advance premium tax credit (government subsidy, if applicable) that is received for your dependents after the pre-tax/post-tax advantage given through the firm
- The benefits of the plan you choose on the Exchange compared to the benefits of your plan at work.
Note: Copays are just one factor. Out-of-pocket maximums and provider network limitations should also be reviewed closely.
Where can I get information about the Marketplaces in California?
For more information on San Francisco health insurance, give Dealey, Renton & Associates a call at 510-465-3090.