Job-Based Insurance: Private Or Public?

Health insurance is a complex topic, and it's important to understand the differences between private and public insurance when considering your options. Private health insurance is offered by private companies, while public insurance is government-funded. In the US, private health insurance is the most common type, with over half of the population covered by it. One of the most popular ways to obtain private health insurance is through an employer, who often provide group coverage to their employees as a benefit. This type of insurance is known as employer-sponsored insurance or ESI. When an individual has insurance through their job, it is considered private insurance.

Job-based insurance and savings on a Marketplace plan

Job-based insurance is a type of health insurance provided by employers to their employees. It is considered private health insurance, as opposed to government-run insurance programs. Group health insurance is designed to cover a group of people, often at lower premiums than individual plans due to group purchasing power. In most cases, employers pay a significant portion of the premiums, making it more affordable for employees.

If you have job-based insurance, you won't qualify for savings on a Marketplace plan if the job-based plan meets certain standards. In 2024, a job-based health plan is considered "affordable" if your share of the monthly premium in the lowest-cost plan offered by the employer is less than 8.39% of your household income. It should also meet a minimum value standard, which means it should be designed to cover at least 60% of medical costs and offer substantial coverage of hospital and doctor services. If your employer's plan meets these standards and is considered "affordable," you won't qualify for a premium tax credit if you buy a Marketplace insurance plan instead.

However, if you have an offer of job-based insurance but haven't accepted it yet, you can update your Marketplace application to see how this offer impacts your savings. If you qualify for savings, you may want to keep your Marketplace coverage and get the details before accepting the job-based insurance offer.

On the other hand, if you already have a Marketplace plan and receive an offer of 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 this case, you may want to cancel your Marketplace plan and choose the job-based insurance.

It's important to note that having both private insurance and public insurance, such as Medicare, is possible in certain situations. For example, if you have coverage through your employer, you can still have private insurance and Medicare simultaneously. The "coordination of benefits" process determines which insurance provider pays first, known as the primary payer. The secondary payer then covers any remaining costs that the primary payer doesn't cover.

Employer-provided insurance and Medicare

If you have health insurance through your employer, you may choose to delay signing up for Medicare when you turn 65. You can delay enrolling in Medicare Part B without incurring penalties as long as your employer insurance qualifies as "creditable coverage", meaning it provides benefits that are at least as good as those offered by Medicare. Once you lose your employer coverage, you can enrol in Medicare during a Special Enrollment Period (SEP) without facing late-enrollment penalties.

Coordinating Employer Insurance with Medicare

If you have both employer insurance and Medicare, you can coordinate your benefits so that either Medicare or your employer plan pays first for covered care. This is called "coordination of benefits". The order of payment is determined by whether Medicare or the employer plan is the "primary payer". The primary payer pays up to the limits of its coverage, and then sends the rest of the balance to the "secondary payer". If the secondary payer doesn't cover the remaining balance, you may be responsible for the rest of the costs.

If you work for a company with 20 or more employees, your employer coverage usually pays first. If you work for a company with fewer than 20 employees, Medicare usually pays first.

Benefits and Drawbacks of Coordinating Employer Insurance with Medicare

Benefits

• Continuous Coverage: You can maintain uninterrupted healthcare coverage as you transition from employment to retirement.
• Delayed Premiums: If your employer insurance qualifies as creditable coverage, you can delay enrolling in Part B without facing late-enrollment penalties, saving you money until you retire or lose your coverage.
• Choice and Flexibility: You can choose when to start Medicare Part B enrollment based on your specific circumstances and healthcare needs.

Drawbacks

• Limited Network: Employer insurance plans may have a limited network of healthcare providers, restricting your choice of doctors and specialists compared to Medicare's broader network.
• Cost Considerations: While your employer insurance may cover some costs, you'll still need to pay Medicare Part B premiums, deductibles, and coinsurance, which can add to your healthcare expenses.
• Coordination Challenges: Coordinating multiple insurance plans can be complex and requires careful planning to understand the rules and deadlines.
• Potential Gaps: Depending on the specifics of your employer plan, there may be gaps in coverage or services that Medicare Part B would otherwise provide.
• Medicare Eligibility: Once you lose your employer coverage, you will need to enrol in Medicare Part B during a SEP to avoid late-enrollment penalties, otherwise, you could face higher costs and gaps in coverage.

It's important to carefully evaluate your individual situation and healthcare needs when deciding whether to coordinate employer insurance with Medicare. Consult with your employer's benefits administrator or HR department to understand the implications of your specific employer plan.

Private insurance and MassHealth

In Massachusetts, MassHealth members can have both MassHealth and private health insurance at the same time. Private health insurance can be obtained through employment, a family member, or a parent with or without custody. If you have private insurance, it is considered a liable third party or "TPL", meaning that the private health insurance is billed as the primary insurer, and MassHealth is the secondary coverage.

The MassHealth Premium Assistance (PA) program reimburses eligible MassHealth members for some or all of the premium cost of eligible private insurance. The program is for MassHealth members who have access to employer-sponsored health insurance (ESI) from a job or another source, such as members of their household. MassHealth may also assist with other out-of-pocket costs such as copayments, deductibles, and coinsurance, ensuring that having ESI does not cost more than when the member only had MassHealth.

If you are a MassHealth member with private health insurance, you will not lose your MassHealth coverage as long as you are still eligible. Your private insurance will be the primary insurer and pay first for your healthcare, while MassHealth will pay for any MassHealth-covered services that your private health insurance does not, including out-of-pocket costs.

If you are a MassHealth member and may have access to private health insurance, you may be required to:

• Supply information about the private insurance plan to determine if it would be cost-effective for MassHealth to require you to enroll.
• Enroll in insurance through your job if MassHealth determines it is cost-effective. MassHealth will reimburse you for any additional costs.
• Maintain any private health insurance that is available to you at no cost, including Medicare.
• Enroll in private health insurance if required by MassHealth, or risk losing your benefits unless you are pregnant or under 21 years old.

Group health insurance

• Coverage for a Group: Group health insurance covers a defined group of individuals, typically employees of a company or members of a professional association.
• Shared Costs: The costs of group health insurance are often shared between the employer and the covered individuals. Employers may pay a significant portion of the premiums, making it more affordable for employees.
• Comprehensive Benefits: Group health plans typically offer comprehensive benefits, including doctor's visits, hospital stays, prescription drugs, preventive care, and other essential medical services.
• Negotiated Rates: Insurance providers often negotiate rates with healthcare providers and facilities, resulting in potential cost savings for both the insurer and the insured.
• Enrollment Periods: Employees or members typically enroll during specified periods, such as their onboarding process or annual open enrollment.
• Provider Networks: Group health plans may have preferred provider networks, which encourage members to seek care from a network of healthcare providers, leading to cost savings.
• Uniform Coverage: All eligible employees or members receive the same base coverage, although there may be options to customize based on individual needs.
• Tax Benefits: Both employers and employees may enjoy tax benefits related to group health insurance premiums.

Employer-sponsored insurance and affordability

Employer-sponsored insurance, also known as employer-provided health insurance, is a type of health insurance offered to employees and their dependents through their job. It is usually more cost-effective than individual plans due to group purchasing power. The employer often covers most of the premium, with the employee paying the remainder.

In the United States, employer-sponsored insurance is considered affordable if the employee's share of the premium for the lowest-cost plan is not more than 8.39% of their household income. This threshold changes annually and is determined by the federal government. If the employer's plan meets this standard, it is considered affordable, and employees will not qualify for financial assistance with a different plan.

The majority of employer-sponsored insurance plans meet the minimum value standard, which requires that the plan covers at least 60% of the total cost of medical services and provides adequate coverage for hospital and doctor services. This is comparable to a Bronze plan with Covered California.

If an employee is offered affordable and adequate employer-sponsored insurance, they will not qualify for financial help to lower the cost of a separate plan. However, if the employer-sponsored insurance is deemed unaffordable, employees may be eligible for a subsidy through Covered California.

It is important to note that employer-sponsored insurance is typically only available while the individual remains employed with the company. If employment ends, individuals may be able to temporarily continue their group health insurance coverage through COBRA, although this can be expensive. Alternatively, they may purchase a separate plan or apply for government-sponsored insurance programs such as Medicare or Medicaid.

Frequently asked questions