Sometimes, even if you offer a variety of options, employees won’t accept a health plan from your company. This might be because they deem the plan (or plans) too narrow to cover all their health needs or too expensive for their budget. Here are a few things that you should know if an employee rejects your offering.
Make Sure Employees Are Informed About Alternatives
Employees may reject a plan because they’re misinformed about their health care alternatives. Make sure they understand that they can only enroll for individual plans during open enrollment periods. In addition, they may be surprised to learn just how much individual plans cost, so encourage them to compare prices before they reject your plan completely.
Also, your employee may have access to health care benefits through their spouse. If this is the case, make sure you note the reason why they’re waiving coverage, as you want to be sure your employee is covered.
If You Offer Coverage That Meets the ACA’s Requirements, Don’t Worry
According to the Affordable Care Act (ACA), applicable large employers must offer health insurance coverage to at least 95 percent of their full-time workers (along with their dependents up to age 26) or face a fine. However, if you’re offering the right insurance and an employee refuses the plan, this does not automatically trigger a fine. As long as your plan meets the ACA’s requirements, an employee who turns it down won’t receive a marketplace subsidy (an action that triggers a fine), and your coverage will still be seen as an ACA-qualified offering.
Affordability Is the Key
Here’s where things get a little confusing. To avoid getting a fine if an employee rejects your health plan, you must first offer your employees at least minimum essential coverage that the ACA also deems affordable. Any health plan that’s sold legally within the state qualifies as a type of minimum essential coverage. However, if that coverage doesn’t meet the ACA’s affordability requirement, you’ll still end up with a fine if your full-time employee gets a plan on an insurance exchange instead. The affordability requirement stipulates that a health plan shouldn’t cost more than 9.5 percent of the employee’s household income.
In other words, if you offer health plans that are more expensive than that 9.5 percent and the employee gets a plan on an exchange, you’ll have to pay one-twelfth of $3,000 for each employee enrolled in an exchange, every month, or you’ll pay $2,000 monthly per all your full-time employees, minus 30 employees, if that fine would be less.
In summary, when an employee rejects your health plan, it isn’t the end of the world for your business. However, you’ll want to make sure you meet the ACA’s affordability requirements so you don’t find yourself facing a surprise fine. Many health plans, like Anthem, and the brokers they work with, can help you ensure you are meeting minimal essential coverate requirements.
Stephanie Dwilson has extensive experience providing expertise on topics including health, law and marketing. She’s a science journalist published by Fox News, a marketing expert and an attorney with expertise in personal injury law. She’s also a small business expert featured by Businessweek and Millionaire Blueprints magazine.