There are many people who think that if you are covered by a group health plan through your employer, you are one of the lucky ones. This is even truer more true as the Affordable Care Act gains momentum and individuals are facing the prospect of purchasing health insurance coverage, many of them for the first time.
However, what if you are not happy with the coverage offered by your employer? Maybe the premiums are still too high to be truly affordable, or maybe you simply do not like the coverage that is offered by the plan. There are a number of different scenarios that might prompt you to explore other options for insurance rather than continue to be covered by the group policy.
There is no law stating that you are required to participate in a group health plan as a condition of employment (although some fields will require proof of individual health insurance if you opt out of the group plan). You can make the decision to remove yourself from the plan at any time.
What Are Your Options?
There are many different individual insurance plans available in every state. The best advice I can give is to talk to an insurance professional about your options. We have Personal Advisors here at HSA for America who can provide you with rates from several different companies based on the coverage you need and desire.
Affordable Care Act Individual Plans
You can choose to purchase an ACA-qualified health plan. If you qualify for a premium tax credit subsidy, you can reduce the amount these plans cost you. You’ll have guaranteed acceptance for any pre-existing condition otherwise not covered in the past, as well as 100 percent coverage of preventive care services. I encourage you to seek the guidance of an independent insurance professional before selecting an ACA plan – on or off the health insurance exchange.
HSA-qualified Qualified High-deductible Deductible Plans
Another option is a high-deductible health plan combined with an HSA account. This is the plan I typically recommend for people, as it gives you more freedom to choose how you spend your health care dollars. You pay all of your medical expenses out of your own pocket until your deductible is met, at which point your insurance steps in and pays. You can choose deductible amounts from $2000 to $10,000 depending on your needs.
The funds you put into your HSA account provide significant tax benefits. Your contribution is tax-free, and the amount you put into your account is also a tax deduction. You can use these funds for any qualified medical expenses such as co-pays and prescriptions. For more detailed information about HSAs, please visit our HSA page.
The THIRP Option
If you do not have a policy through your employment or you do not like the plan offered, you can ask your employer about implementing a Tax-free Health Insurance Reimbursement Plan, or THIRP. This is a tax-free account your employer contributes to in order to reimburse you for health insurance premiums only.
You’ll have the freedom to browse individual plans of your choice, and still qualify for a health premium subsidy if your income qualifies. A THIRP won’t affect your taxable income, since it’s a fringe benefit that is paid to you before taxes on payroll.
Short Term Policies
If you are not yet eligible for your employer’s group plan or have already decided to opt out but do not have a policy in place, a short-term insurance policy may be a good temporary solution. These polices are often renewal up to a year, and can provide limited benefits while you research the best options for your health insurance. You can learn more about short-term policies on our Short Term Plans page.
Things To Be Aware Of
Although employer-based insurance plans do not always provide the coverage you need at a price you deem affordable, you need to think carefully about the decision to opt out of the group plan. If your employer offers coverage and the cost to you is less than 9.5 percent of your income, you will not qualify for any federal premium subsidies. Without subsidies, many people are unable to afford the cost of an ACA-compliant health plan.
Additionally, an employer-based group plan can often cost less overall that a more traditional health plan. Deductibles are often lower unless the plan is a high-deductible health plan combined with an HSA.
The only plan that will enable you to both shop for your own policy and receive a premium subsidy or tax credit is a THIRP. You may want to talk with your employer about using a THIRP as the benefit package instead of providing a group health policy.
Whether you choose to stay with your group health plan or not, it is important that you talk with a Personal Advisor before making any health care decisions. In this way, you can be sure that you are exploring all of the available options before committing to a particular plan.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.