If you are one of many Americans whose employer offers group health coverage or other health insurance options, you may already be considering which health plan best suits you and your family ahead of the 2019 Open Enrollment Period.
Each year, around half of the population of the United States benefit from employer-based health insurance plans, and with this year’s Open Enrollment period starting soon, employees across the country are starting to examine the options on offer.
To help you choose the best health plan and ensure you have all the information needed to make the most informed choice, we have put together a guide to help answer common questions and considerations surrounding employer-sponsored health insurance.
Common Questions About Employer-Sponsored Insurance Coverage
Am I eligible for group health coverage through my employer?
First and foremost, you need to find out whether you are entitled to health insurance through your employer or whether you need to enroll using the individual health insurance marketplace. If your employer offers group health coverage to any full-time employers, this offer must be extended to all people who work full-time, and the same principle applies to part-time staff (those working 30 hours a week or less).
Employers are not allowed to exclude anyone from group health coverage on the basis of preexisting medical conditions and any company with 50 or more full-time workers is legally required to provide group health coverage.
Remember, if you are over 65 and eligible for Medicare or have a disability and qualify for Medicaid, you may still be able to take advantage of these benefits alongside employer-sponsored health insurance.
What health insurance coverage options does my employer offer?
Employers may offer a variety of different forms of health insurance coverage. Some health plans are fully paid by employers, others are employee paid through deferral of salary or a “cafeteria plan”, while others are cost-shared. We will go into these in some more detail later on.
Not all businesses are required to provide health plans, but under the Affordable Care Act (ACA), certain applicable large businesses face penalties if affordable health coverage is not made available. Many smaller businesses also offer health insurance plans for workers and receive tax credits if eligible.
When does Open Enrollment start for my employer-sponsored health plan?
For those who do not get health insurance coverage through their employers, the 2019 Open Enrollment period for coverage through the federal health insurance exchanges starts November 1, 2018, and ends on December 15, 2018. The exceptions are a small number of states, such as California, Massachusetts, Minnesota, and Washington, which have their own state health insurance exchanges and, in some cases, different Open Enrollment deadlines.
If you select a health plan through your employer, rather than a marketplace health insurance plan on HealthCare.gov, the Open Enrollment period typically falls between the two dates above, but your company should inform you of the specifics. If unsure, speak to your employer or human resources department for details about Open Enrollment dates.
What if I miss my employer’s Open Enrollment period?
Miss the Open Enrollment deadlines and you will probably have to wait for the following year to enroll in a health plan. If you are very lucky, your employer may make allowances if you made an error and forgot to enroll but in most cases, you will have to wait or look into short-term plans, as exceptions are often prohibited by the insurance company under the group plan terms.
In certain circumstances, you may be eligible to enroll during a Special Enrollment Period (SEP), for instance, if you have gone through a major life event, such as marriage, change of job, divorce, or the birth of a child.
Does my employer have an active or passive enrollment policy?
It is important to understand how your employer’s group health coverage works. Companies have either an “active” or “passive” enrollment policy, which you will need to understand to ensure you get health coverage in 2019.
“Passive enrollment” is a popular option in many companies as employees’ health coverage rolls over into 2019 unless the employee makes changes during the Open Enrollment period.
Automatic renewal is an attractive option for many businesses as it requires less administrative work and is easier to ensure employees are enrolled in health plans. However, it increases the likelihood that employees will simply allow policies to roll over rather than evaluating the potential benefits to be gained from changing their health insurance.
“Active enrollment” requires employees to take action to enroll in a health plan, regardless of whether they were signed up in 2018. Employees who fail to enroll within the 2019 Open Enrollment period will lose their coverage.
There is a risk that employees will be left without health coverage if not properly engaged, but the upside is that employees are likely to examine health plans more carefully and select new coverage better suited to their individual needs.
Understanding Employer-Sponsored Health Coverage Options
What is a high-deductible health plan?
Many employers now offer workers high-deductible health plans (HDHPs). In 2018, more than half of all Americans enrolled in employer-sponsored health plans had deductibles of more than $1,000, according to a study by the Kaiser Family Foundation.
An HDHP typically features a higher annual deductible but lower premiums than a traditional health insurance plan. However, in order to claim benefits from an HDHP, employees must first meet this deductible.
What is an HSA?
A Health Savings Account (HSA) may be opened by employees enrolled in an HDHP. Money totaling an annual limit set by the government may be deposited in the account using pre-tax dollars and funds from these accounts used to pay medical expenses. Funds may be used even when a deductible has not been met and no tax is due on money withdrawn for medical bills.
Employers may also deposit a limited amount in an employee’s HSA. However, unlike a Health Reimbursement Arrangement (HRA), HSAs are owned by the individual employee and remain with them even if they leave the company.
What are the HDHP and HSA limits for 2019?
|HDHP minimum deductible:||$1,350||$2,700|
|HDHP maximum out-of-pocket:||$6,750||$13,500|
|HSA maximum contribution:||$3,500||$7,000|
What is an HRA?
HRAs are accounts funded by employers, unlike a Cafeteria Plan, in which contributions are made via employee-salary deductions. HRAs can be used to reimburse employees for health expenses not covered by company-sponsored insurance after the expenses are incurred.
A major advantage of HRAs for employees is that reimbursements are tax-free if you pay for qualified medical expenses. Another potential benefit is that employees are reimbursed for a healthcare plan that meets their individual needs, rather than relying on a standardized company plan.
HRAs may also be used to cover the medical expenses of spouses or dependants and can be offered alongside other employer-provided health benefits, such as Flexible Spending Accounts (FSAs).
What are Section 125 or Cafeteria Plans?
Section 125 or Cafeteria Plans are flexible benefit plans and are often used by small businesses. These allow employees to withhold a portion of their pre-tax salary to cover medical expenses, reducing their taxable income and increasing the percentage of their salary that they take home.
Employees on a Cafeteria Plan can opt for a Premium Only Plan (POP), in which health insurance premium deductions are made with funds from their pre-tax salary, and FSAs, which allow employees to fund out-of-pocket medical expenses not covered by insurance using a portion of their pre-tax salary. Utilizing FSAs provides some protection against rising insurance costs, allowing you to reduce your out-of-pocket expenses by setting aside tax-free earnings.
Ahead of the plan year, employees estimate how much they will pay for out-of-pocket medical expenses and this is deducted from their salary over the year. Employees pay out-of-pocket expenses upfront, then submit a claim to the plan’s administrator, after which they are reimbursed from their account.
Important Note: Any unused funds are forfeited at the end of the year, so it is important to be as accurate as possible when estimating your annual medical expenses.
What do I need to know when choosing an employer-sponsored health plan?
What is the annual cost of my healthcare?
It will be far easier to select an employer-sponsored health plan if you have a clear idea of the annual cost of your healthcare and that of your family. Look at how much you spent in 2018 and in previous years and consider whether you will have any additional expenses in 2019, for example, if you recently started taking any new prescription medication or started any new treatments.
You should also consider your financial situation and what you can afford in deductibles and copays over the year. An HDHP with low premiums may seem a great option, but if you incur unexpected healthcare costs, the high deductible may place added pressure on your household finances.
What is covered by my health plan?
Examine all plan options carefully to see which plan is best-suited to your healthcare needs. Paying a higher premium for a better plan may end up cheaper overall if the more comprehensive health plan covers treatments you or your family are likely to require.
Make sure you look beyond the annual premium; you also need to consider the health plan’s out-of-pocket costs and whether or not you can afford them.
Is my prescription medication covered by the insurance company's formulary
Always check the formulary (list of drugs covered by the insurance company) on your insurer’s website to see if your prescription medication is covered. If it isn’t, don’t despair - your physician may be able to suggest a cheaper generic option or an alternative that is on the formulary.
Remember, even if your medicine is covered by the insurance company, you may find paying the cash price using your RxSpark card is still cheaper than the copay, and if it isn’t covered, your card can save you up to 80 percent on prescriptions.
Is my physician within my provider network?
If you regularly visit the same physician make sure you check whether your doctor or clinic is within your plan’s network. Don’t forget to check on other treatment providers you use, for instance, optometrists, chiropractors, and other healthcare professionals, as these may not be included in some provider networks.
Would I be better off choosing an HDHP with an HSA?
Everyone’s healthcare needs are different, so what suits one person may not suit another. You may prefer to pay lower premiums on an HDHP and opt to put money aside in an HSA rather than pay higher monthly premiums on a more traditional plan. Make sure you explore all the options available to you before enrolling on one of the health plans offered by your employer.
Is my spouse or partner’s health plan better?
If you and your partner are both employed and eligible for employer-sponsored health insurance, compare the options offered by both sets of employers. You may find that, while your insurance was the best option last year, the health plans available to your spouse offer better benefits or lower premiums.
How can RxSpark help?
Remember, RxSpark can help you reduce your healthcare costs, even if you have great insurance through your employer.
If you take medication not included on your insurer’s formulary, we can help you find the cheapest prices at pharmacies in your zip code and save up to 80 percent on the cash price. You may even find cash prices using your RxSpark card are cheaper than the copay!
We will continue to keep you up-to-date with information, guides, and details of the 2019 Open Enrollment period. Check in with the RxSpark blog in the coming weeks for more articles and information on this year’s Open Enrollment.
Not an employee but planning to sign up for health insurance during Open Enrollment 2019? Read Open Enrollment 2019 & Health Insurance – Your Guide for more advice and information.