Jane Dotson
It is possible to decline employer-sponsored health insurance and opt for Medicaid instead. However, it is important to carefully evaluate your budget and alternative options before making a decision, as individual health plans can be significantly more expensive than employer-sponsored coverage. If you have a Marketplace plan and receive an offer of health insurance from your employer, you may no longer qualify for savings on your Marketplace plan, even if you don't accept the job-based coverage offer. If you qualify for Medicaid, you can use it as a secondary insurance to cover co-pays, deductibles, and insurance premiums.
| Characteristics | Values |
|---|---|
| Can you decline employer health insurance? | Yes, you can decline your employer's health insurance. |
| Do you need to sign a waiver? | You may have to sign a waiver stating that you will obtain another insurance plan or accept someone else's insurance coverage. |
| When can you enroll in employer-sponsored health insurance? | You can enroll during your employer's open enrollment period or if you qualify for special enrollment due to a qualifying event, such as getting married or having a child. |
| Can you cancel employer-sponsored health insurance mid-year? | Generally no, unless you experience a qualifying life event. |
| Can you get Medicaid if your employer offers health insurance? | Yes, you can use Medicaid if you qualify financially, even if you decline your employer's insurance. Medicaid can be used as a secondary insurance to cover copays, deductibles, and insurance premiums. |
| How do you qualify for Medicaid? | Qualification for Medicaid is based on your income level and other factors such as age, medical condition, and residence. |
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What You'll Learn
You can decline employer insurance and get your own
Yes, you can decline employer insurance and get your own. Employers typically offer health insurance as part of their benefits package, but they usually don't require employees to enroll in it. You can decline or waive this benefit and get your own insurance. However, before making a decision, it is important to carefully evaluate your budget and alternative options. Individual health plans can be significantly more expensive than employer-sponsored coverage, as employers often contribute to premiums. Therefore, it is important to consider the potential increase in costs when deciding whether to decline employer-provided insurance.
If you decide to decline your employer's insurance, you may want to consider enrolling in a Marketplace plan, such as Obamacare or Affordable Care Act insurance. These plans are available to those who do not have access to affordable job-based insurance and may offer savings to those who qualify. To determine if you qualify for savings, you can fill out an application, and your household income will be assessed. It is important to note that if you have a Marketplace plan and later receive an offer for job-based insurance, you may no longer qualify for savings on your Marketplace plan, even if you don't accept the job-based coverage.
In addition to Marketplace plans, you may also have the option to enroll in Medicaid if your income level is low enough. Medicaid is a government-provided insurance plan that offers coverage for little to no cost to those who qualify. In some cases, you may even be able to use Medicaid as a secondary insurance plan to help cover deductibles and co-pays if you are having trouble paying these expenses through your primary insurance. However, it is important to note that Medicaid is the last resort payer if you have coverage through another agency, and it may not cover all the same expenses as your primary insurance.
Finally, if you are considering declining employer insurance in favor of your own plan, it is important to be aware of the potential impact on your taxes. In the past, the Affordable Care Act included a tax penalty for those without health insurance coverage. While this penalty is no longer in place as of 2019, it is still important to consider the potential tax implications of any insurance plan you choose. Overall, while you do have the option to decline employer insurance and get your own, it is important to carefully weigh the costs, savings, and benefits of each option before making a decision.
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Employer-sponsored insurance is often cheaper
Yes, you can decline employer-sponsored health insurance. However, it is important to carefully evaluate your budget and alternative options before making a decision, as individual health plans can be significantly more expensive. If you decline your employer's health insurance, you may have to sign a waiver stating that you will be obtaining another insurance plan or accepting someone else's insurance coverage. This is so that your employer has proof of your insurance for legal purposes.
According to the Affordable Care Act, employers with at least 50 full-time employees or full-time equivalents are required to provide health coverage to their workers. This is referred to as "applicable large employers" or ALEs. Companies that do not comply may be subject to penalties.
The cost of health insurance benefits for active workers is not generally perceived as a "crisis", but these benefits can be costly for employers. Over the past decade and a half, the cost of health insurance has grown more rapidly in the public sector than in the private sector. Data from the US Bureau of Labor Statistics shows that between 2000 and 2014, health insurance costs as a share of total compensation rose by roughly 4 percentage points for nonfederal public sector employers, compared with 2 percentage points for private sector employers.
In 2025, a job-based health plan is considered "affordable" if the employee's share of the monthly premium in the lowest-cost plan offered by the employer is less than 9.02% of their household income. If the premiums are considered affordable for the employee, but not for other members of the household, then only the other household members may qualify for savings on a Marketplace plan.
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You can use Medicaid as secondary insurance
You can decline your employer's health insurance, but it is important to carefully evaluate your budget and alternative options before making a decision. Individual health plans can be significantly more expensive than employer-sponsored coverage, as employers often contribute to premiums. However, if your employer's insurance plan does not meet your needs, you may opt for an individual plan or a different form of insurance.
In most cases, Medicaid acts as the payer of last resort for most services. Under the program's third-party liability (TPL) rules, other legally responsible sources are generally required to pay for medical costs before the Medicaid program. This means that your employer-sponsored insurance would likely be responsible for payment before Medicaid.
Providers who accept Medicaid payment for beneficiaries with another coverage source may charge cost-sharing for services covered by both sources. However, this cost-sharing can only be charged up to allowable Medicaid amounts and only if the payment from the other source is less than Medicaid's rate.
Medicaid may also make arrangements for private plans and other entities to pay providers for Medicaid-covered services. For example, many Medicaid enrollees receive their benefits through managed care plans, which contract directly with states and must comply with Medicaid-specific requirements.
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You may not qualify for savings on a Marketplace plan
Most job-based plans meet these standards, and if your employer's plan does, you won't qualify for a premium tax credit if you buy a Marketplace insurance plan instead. If you have an offer of job-based coverage, you can update your Marketplace application to find out how this offer impacts your Marketplace savings.
If you have a Marketplace plan and get an offer of health insurance through your job, you may no longer qualify for savings on your Marketplace plan even if you don't accept the job-based coverage offer. If you already have a Marketplace plan and get offered a job-based health plan, you can choose to cancel or keep your Marketplace plan, but you might not qualify for cost savings, depending on whether the job-based plan is considered affordable.
If you have qualifying health coverage through Medicaid, you no longer qualify for the premium tax credit or extra savings to lower the cost of your Marketplace plan. You will have to pay full price for your Marketplace plan premium and covered services.
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You can get ACA coverage, but no subsidy
It is possible to decline employer-sponsored health insurance and instead opt for an individual plan. However, it is essential to carefully evaluate your budget and alternative options before making this decision, as individual health plans can be significantly more expensive than employer-sponsored coverage. Typically, employers contribute to premiums for their employees, making group coverage more affordable than individual plans.
If you decide to decline your employer's health insurance, you can purchase an individual plan through the Healthcare.gov marketplace, directly from a private health insurance company, or through other sources such as Medicare or Medicaid. You may also be eligible for coverage under your spouse's plan.
Now, when it comes to ACA coverage and subsidies, it's important to understand the following:
- The Affordable Care Act (ACA) provides subsidies in the form of premium tax credits and cost-sharing reductions (CSR) to eligible individuals to lower premiums and out-of-pocket costs.
- Eligibility for these subsidies is primarily based on income, specifically the Modified Adjusted Gross Income (MAGI).
- In general, premium subsidies are not available to individuals with income (MAGI) above 400% of the Federal Poverty Level (FPL). However, from 2021 to 2025, there is no income cutoff at 400% FPL due to the American Rescue Plan and the Inflation Reduction Act.
- In states that have expanded Medicaid under the ACA, adults earning up to 138% FPL are generally eligible for Medicaid and not Marketplace subsidies.
- In states that have not adopted Medicaid expansion, adults with income as low as 100% FPL can qualify for Marketplace subsidies.
- Lawfully present immigrants below 100% FPL may also be eligible for tax subsidies through the Marketplace if they meet other eligibility requirements.
Therefore, if your income is above 400% FPL (or above 138% FPL in expanded Medicaid states), you may not qualify for a subsidy and would need to pay the full premium for ACA coverage. It's important to note that eligibility and rules may change over time, so it's always a good idea to refer to the most up-to-date information available.
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Frequently asked questions
Yes, you can decline your employer's health insurance and purchase your own insurance. However, you may have to sign a waiver stating that you will be obtaining another insurance plan. It is important to note that individual plans can be more expensive than employer-sponsored plans, as employers typically pay a portion of the premiums for their employees.
You may be eligible for Medicaid if you meet certain financial requirements. Medicaid can be used as a secondary insurance to cover co-pays, deductibles, and insurance premiums. However, it is important to note that you cannot receive subsidies through the marketplace if you decline employer insurance and choose to enrol in a Marketplace plan.
If you decline your employer's health insurance, you can consider the following alternatives:
- Marketplace plans: You can enrol in a Marketplace plan, also known as Obamacare or an Affordable Care Act plan. You may qualify for savings on your premiums through a premium tax credit.
- Medicare: If you are 65 or older, you are eligible for Medicare.
- COBRA: If you have recently left your job, you may be able to continue your employer's insurance plan through COBRA, but it is typically more expensive.
When deciding between employer-sponsored insurance and other options, it is important to evaluate your budget and alternative options carefully. Consider the following:
- Cost: Compare the monthly premiums, deductibles, copayments, and coinsurance for each plan.
- Coverage: Review the benefits and exclusions of each plan to ensure it meets your needs, including coverage for specific doctors or services.
- Eligibility: Check if you are eligible for any savings or subsidies, such as premium tax credits or Medicaid, based on your income and household information.
