FAQs on Employer-Sponsored Health Insurance during COVID-19
Q: If a business cannot continue to make premium payments for employer-sponsored group health insurance, and the coverage is terminated, can the employees purchase coverage on the ACA Insurance Marketplace?
A: Yes. The employees will qualify for an ACA Special Enrollment Period (SEP) due to their loss of qualifying coverage. Those who lose qualifying coverage can enroll in an ACA plan through the Marketplace Before making a final choice, all individuals might want to contact their current providers and the insurance company to make sure that their providers are in their new plan’s network.
Q: In the situation listed above, how do grace periods apply?
A: The grace period for late premium payments for coverage purchased in the group market is governed by State law. Several State Departments of Insurance (DOIs )either require or encourage insurance companies to offer consumers flexibility regarding premium payment deadlines and grace periods.
Q: When can employees losing employer-sponsored health insurance coverage apply for ACA Metal Tier Plans, and when will the coverage begin to take effect?
A: They can apply for ACA Metal tier plan health insurance coverage via their state’s Marketplace and select a plan up to 60 days before or after they lose coverage. Coverage starts the first day of the month after they chose a plan if coverage has been lost by then. If they know they will be losing coverage within the next 60 days, they can apply HealthCare.gov to make sure there’s no gap in coverage; the new coverage can start the first of the month after they lose coverage.
For example, if “Maria” knows she’ll lose coverage on March 30, and she submits an application and selects a plan on March 4, her coverage will start on April 1. If Julia loses coverage on March 30 and doesn’t choose a plan until April 3, her coverage won’t begin until May 1, resulting in a one-month gap in coverage.
Q: If a business reduces hours for an employee resulting in a loss of health coverage or a change in health coverage options, will the employee qualify for an ACA metal tier SEP opportunity?
A: If an employee loses employer-sponsored health insurance because of a change in eligibility, such as a reduction in hours, they are eligible for a special enrollment into ACA metal tier plans, even if they can elect COBRA continuation coverage. If an employee’s hours change, they will also qualify for a special enrollment in ACA metal tier health insurance if they lose their current coverage. However, they will not be eligible for Advanced Premium Tax Credit (APTC) if they still are offered a health coverage option that meets affordability rules
Q: May an employee qualify if their income is drastically cut due to a reduction in hours, or their employer reduces its contribution?
A: If an employee’s income is cut because of a reduction to salary, wages, or hours, or if the business reduces its contribution to their health coverage, the employee will qualify for an SEP if their coverage is now unaffordable. The coverage must be able to be terminated. Employees whose job-based coverage is newly unaffordable must terminate their job-based coverage to qualify for this SEP and APTC. Employees in this situation who are applying for individual coverage through HealthCare.gov should attest to losing coverage to access this SEP and will need to provide the date of their coverage loss. Finally, when deciding whether to switch to Marketplace coverage, employees in these situations may want to consider factors such as whether their circumstances may change later in the year, and that they will no longer be eligible for APTC if they then experience a household income increase that would make their job-based coverage affordable again.
Q: Employees may be receiving an economic impact payment. What is it? Will it impact their eligibility for financial assistance for Marketplace health plans?
A: The Coronavirus Aid, Relief, and Economic Security (CARES) Act calls for economic impact payments of up to $1,200 per taxpaying adult and $500 for each child under 16 years of age. If an employee gets one of these payments, they shouldn’t include it in the household income reported on their ACA Metal Tier marketplace application.
These payments are not considered part of the Modified Adjusted Gross Income, so these payments do not impact eligibility for subsidies or additional cost-sharing credits through the Marketplace, Medicaid, or the Children’s Health Insurance Program (CHIP).
More information available at https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know
Q: What does it mean for coverage to be “affordable,” and what is the “minimum value standard”?
A: A job-based health plan is “affordable” if an employee’s monthly premiums for the cheapest, self-only coverage from the employer & meets the minimum value standard. The minimum value standard and overall threshold for “affordability” is when the cost of the health insurance premium is less than 9.78% of the employee’s overall household income. (Note: An employee may pay more than this if enrolled in spouse or family coverage, but the cost of self only coverage determines affordability.) To learn more, see https://www.healthcare.gov/have-job-based-coverage/change-to-marketplace-plan/.
If an employee isn’t sure whether their coverage is now unaffordable, they can complete an application on HealthCare.gov or through the state Marketplace and include up-to-date information about their coverage and income.
Also, employees can use the Employer Coverage Tool to gather the information needed to check if their job-based coverage is affordable or not: https://marketplace.cms.gov/applications-and-forms/employer-coverage-tool.pdf.
Q: Do furloughed employees qualify for a special enrollment via the marketplace?
A: Yes, furloughed employees whose qualifying health insurance plan becomes unaffordable or is lost, as a result, will be eligible for an SEP because of loss of coverage. This can happen for several reasons. One, a furloughed employee may no longer have an offer of health coverage if their employer terminates the coverage or stops making premium payments, and the coverage is terminated as a result. Because these individuals no longer have access to job-based coverage, they may qualify for an SEP due to their loss of coverage, and they may be eligible for APTC to help pay for coverage.
Two, if the employer increases its employees’ required contributions to the health coverage, it may make their job-based coverage newly unaffordable, and the employee may qualify for an SEP.
Three, even if an employer does not stop paying for the employees’ health coverage, or does not increase the employees’ required contributions, an employee may qualify for an SEP if they experience a change in household income that makes their coverage unaffordable. And they are allowed to terminate their job-based coverage.
Furloughed employees who are eligible for an SEP may decide to switch to ACA metal tier health insurance plansHowever, they may want to consider factors such as how long their furlough may last, and that they will no longer be eligible for APTC if they later experience an increase in household income that makes their employer’s coverage newly affordable for them. Additionally, before choosing a plan through the Marketplace or otherwise, all individuals may first wish to contact their current providers and the insurance company to make sure that their current providers are included in that plan’s network. If they decide to apply for coverage on HealthCare.gov, furloughed employees whose coverage becomes unaffordable and those who lose or terminate coverage should attest to losing coverage and provide the date of their coverage loss to access an SEP. The coverage effective dates described in the answer to Q3 also apply.
Q: Can employees who lose their job and their employer-sponsored health insurance coverage qualify for an SEP even if they’re entitled to elect COBRA continuation coverage?
A: Yes. Eligibility for COBRA continuation coverage does not disqualify an individual from a loss- of-coverage SEP.
Also, if an employee initially elects COBRA continuation coverage, they may still use their loss-of-coverage SEP to enroll in an ACA plan until the end of the 60-day window. They may also qualify for APTC if they terminate their COBRA continuation coverage. If the employee decides to terminate the COBRA coverage early and after the 60-day window, the employee will not be eligible for a loss-of-coverage SEP and will need to wait to enroll until the next open enrollment period, unless they qualify for another SEP or are described in Question 9.
Note: State law may also provide for other continuation coverage, such as continuation coverage that applies to health insurance offered by employers with under 20 employees. This is often referred to as mini-COBRA. Being eligible for mini-COBRA does not make an employee ineligible for a loss of coverage special enrollment period.
Q: Can an individual enrolled in COBRA continuation coverage qualify for a SEP if their COBRA continuation coverage costs change due to their former employer stopping contributing, and they now pay the full price?
A: Yes, a consumer in this situation may qualify for a SEP. For more information, please see https://www.healthcare.gov/unemployed/cobra-coverage/.
Learn more about SEP’s when it comes to the loss of employer-sponsored coverage – give us a call at 800-962-4693.