 If you have a middle class family and are subsidizing that employee's health insurance, you could be doing a disservice to the employee. |
The Affordable Care Act (ACA) is complex. With its complexities also come some surprising ways to play differently. The numbers do not lie and I'll show you why.
In the process of offering group health insurance, an employer is generally required to participate 50% toward an eligible employee’s group health premium. Because the employer is in essence ‘subsidizing’ the policy already, this generally means that NO subsidy is available from the federal government if an employee chooses to purchase an individual policy through the Health Insurance Marketplace. The logic is this prevents a family from ‘double dipping’ their subsidies.
Try as the government might in shutting down Defined Contribution strategies such as the Section 105 HRA’s and Section 125 FSA’s, there are still clever and legal means for the employer to attract, retain and keep healthy their quality employees.
Here’s a case in point:
Let's consider an employee family of four with an income of $50,000 a year.
For the employee to insure his entire family, he can either:
The reason is that with the absence of group health insurance, the entire family would qualify for a Federal Subsidy.
The total cost to the family after subsidies would be only $3,360 a year, a saving of $6,000 a year for the family.
A difference of $6,000 a year is huge for a household with $50,000/year income, this is not a minor factor!
Numbers have been calculated through CoOportunity Health website. Click HERE to find out how much you can save or visit my Individual & Family Insurance page for more links.
If you found this helpful, please share with others:
In the process of offering group health insurance, an employer is generally required to participate 50% toward an eligible employee’s group health premium. Because the employer is in essence ‘subsidizing’ the policy already, this generally means that NO subsidy is available from the federal government if an employee chooses to purchase an individual policy through the Health Insurance Marketplace. The logic is this prevents a family from ‘double dipping’ their subsidies.
Try as the government might in shutting down Defined Contribution strategies such as the Section 105 HRA’s and Section 125 FSA’s, there are still clever and legal means for the employer to attract, retain and keep healthy their quality employees.
Here’s a case in point:
Let's consider an employee family of four with an income of $50,000 a year.
For the employee to insure his entire family, he can either:
- Insure the family through the employer for $9,384 after 50% eligible employee contribution.
- Get insurance from the company for himself at a cost of $1,560 after the employer contribution and then insure the rest of the family on their own Silver Plan for $7,800. Total cost of $9,360 to insure the entire family. No government subsidies are here because the family is not eligible because the employer had "affordable" insurance for the employee.
The reason is that with the absence of group health insurance, the entire family would qualify for a Federal Subsidy.
The total cost to the family after subsidies would be only $3,360 a year, a saving of $6,000 a year for the family.
A difference of $6,000 a year is huge for a household with $50,000/year income, this is not a minor factor!
Numbers have been calculated through CoOportunity Health website. Click HERE to find out how much you can save or visit my Individual & Family Insurance page for more links.
If you found this helpful, please share with others:
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