Health Insurance is a Family Issue

As I speak with individual business owners and groups about Obamacare, I find most if not all employers are not aware of the rules concerning the coverage of their employee's dependants.

Many people are aware that the Affordable Care Act allowed employees with dependants to extend that coverage to dependents up the age of 26. This was a hugely popular "early win" in 2010 for Obamacare and extended coverage to many young adults. However, this is not the full extent of employer obligations to their employee's dependant children.

If your company is required to offer coverage to your employees under the rules of the ACA, then you are also required to offer coverage for those employee's dependent children. Interestingly, the ACA does not consider a spouse a dependent for this rule.

And, that coverage has to be "affordable" but the "affordability" is based on just the "employee only" coverage. According to the IRS FAQ:

If an employee’s share of the premium for employer-provided coverage would cost the employee more than 9.5% of that employee’s annual household income, the coverage is not considered affordable for that employee. Because employers generally will not know their employees’ household incomes, employers can take advantage of one or more of the three affordability safe harbors set forth in the final regulations that are based on information the employer will have available, such as the employee’s Form W-2 wages or the employee’s rate of pay.

According to Obamacare regulations, if employer-sponsored group health coverage is “affordable” (based on the employee cost for employee-only coverage), then employees, and any of their dependents who are eligible for the plan, are not eligible for subsidies when purchasing individual coverage through a public marketplace exchange.

So, understanding this provision is very important - you might be doing the right thing for your employees based on your understanding of their family needs but in fact could be offering more expensive insurance through your plan than the employee could recieve on the exchanges for their family. This dilemna is complicated if your employees are on the low end of the wage scale because of the recent expansion of Medicaid and other children's coverage plans in place in some states. If you company does not currently offer dependent coverage for your employees are you considering expanding your coverage?

Are your employees asking these questions?

I look forward to hearing from you on how you and your companies are approaching this challenge.