Employer Sponsored Coverage
A new rule, effective January 2023, changes the way affordability is determined for employer- sponsored health insurance.
What is the new rule?
- The affordability of employer-sponsored health insurance for employees and their families is now calculated separately.
How is affordability determined?
- The employee’s plan and their family’s plan are considered affordable if the annual premium for each does not exceed 8.39%* (for 2024) of the household’s annual income.
- If the cost of coverage exceeds 8.39%, it is considered unaffordable and the employee and/or family member(s) may be eligible for a tax credit through Your Health Idaho.
What do employers need to do?
- Employers do not need to do anything. If the coverage that is offered to their employees and/or families is considered unaffordable, Your Health Idaho will confirm the premium(s) exceed 8.39% and calculate the amount of tax credit they are eligible for.
If you have employees and/or their families who are enrolled in employer-sponsored health insurance that is considered unaffordable, they can enroll in coverage through Your Health Idaho two times during the year:
- Your Health Idaho’s Open Enrollment
Employees and/or their families can enroll in coverage during Your Health Idaho’s Open Enrollment, October 15 – December 15. The application will ask if they are offered employee-sponsored coverage; they will need to answer “yes” and provide the amount of the annual premium for each family member. Once enrolled, they will then need to cancel their employer-sponsored coverage effective midnight December 31. Their new coverage will begin January 1.
- Employer’s Open Enrollment
Employees may opt not to re-enroll during an employer’s open enrollment and enroll through Your Health Idaho. Before opting out, it is recommended that they complete the application process to confirm their employer-sponsored coverage is considered unaffordable and that they are eligible for a tax credit. To do this, they will need to provide the amount of the annual premium for each family for their employer-sponsored coverage for the upcoming year. Once the application is complete and the coverage is deemed unaffordable, a Special Enrollment Period will open, during which they can enroll in health insurance through Your Health Idaho.
*This percentage is determined each year by the IRS.
Frequently Asked Questions
- If a spouse and/or dependents are not enrolled in coverage, they can apply during Your Health Idaho’s Open Enrollment to find out if they qualify for a tax credit and then enroll.
- If a spouse and/or dependents are enrolled through employer-sponsored coverage, they can apply through Your Health Idaho during their employer’s Open Enrollment Period. If approved for a tax credit they can opt to not re-enroll with their employer.
NOTE: Filling out and submitting an application to determine tax credit eligibility does not commit the applicant to enrollment in coverage.
- The cost of employee coverage is deemed affordable if the employee’s annual premium does not exceed 8.39% of their annual household income (for 2023).
- The cost of an employer-sponsored family plan for a spouse and/or dependents is calculated separately but uses the same 8.39% of annual income to determine affordability.
- If coverage is deemed unaffordable for any family members, they will most likely be eligible for a tax credit and can shop for plans at YourHealthIdaho.org.
Yes, but only during their employer’s or Your Health Idaho’s Open Enrollment.
Important: People who intend to decline an offer of employer coverage should first apply with Your Health Idaho and ensure they a) are eligible for a tax credit and b) are eligible to enroll either during Open Enrollment or with a Qualifying Life Event.
Only if the employer employs more than 50 full-time employees.
No, there are no current rules mandating that employers provide affordable coverage for employees’ families.
Only wellness incentives related to tobacco use are factored into premiums used to determine tax credit eligibility. For example, if an employee is offered a plan at $200 a month at a smoking rate and the employee secures a $50 a month wellness benefit which reduces their premium to $150 a month, affordability would be calculated using the reduced premium of $150 a month.
If both parents have access to affordable health coverage, the cost of coverage for a family plan could still be deemed unaffordable, making the children eligible for a tax credit.