Health insurance coverage is one of the most common workplace benefits and employer-based plans are the most standard form of health coverage in the United States. With more than half of the non-elderly population receiving this sort of coverage. But what if you’re not interested in the insurance that your employer offers or think it’s too expensive? Can you still enroll in Obamacare if your employer offers insurance? Yes, but there are some important caveats to consider.

Can I enroll in Obamacare if my employer offers insurance?

You’re always welcome to buy individual and family health insurance from the Affordable Care Act Marketplaces as long as you are living in the U.S., are not incarcerated, and are either a U.S. citizen or have one of these immigrant statuses. You can buy Obamacare plans during the annual Open Enrollment Period or during a Special Enrollment Period if you have a qualifying life event.
Sometimes buying an individual plan from the Marketplace can be better if you need more comprehensive coverage. Or if you want a cheaper option. When comparing costs for health insurance through your employer vs. Obamacare, it’s important to remember two things. 1) Your employer may contribute to your health insurance costs (up to 100% at some companies). But won’t do so if you enroll in Obamacare. 2) You most likely won’t qualify for Marketplace subsidies and will have to pay full price for an Obamacare plan.

How can I decline health insurance from my employer and still get an Affordable Care Act subsidy?

While most people who decline employer-sponsored health insurance won’t qualify for subsidies on an Obamacare plan, you could be eligible if your employer offers health insurance and you truly can’t afford it. However, whether your employer health insurance is too expensive isn’t just a personal judgment call.
Rather, there are two standards to determine if you’re eligible for an ACA subsidy if you decline coverage through your employer. First and foremost, your employer-sponsored health plan must meet the “minimum value standard”. This means your plan must include substantial coverage (physician and inpatient hospital services). Plus, it needs to pay for at least 60% of covered medical costs. Secondly, the cheapest plan through your employer (that meets this “minimum value standard”) cannot cost more than a certain percentage of your household income. This number is 9.56% in 2018; it is updated each year by the IRS. Note that this calculation is made using your portion of the monthly premium that covers you, the employee. This does not include premiums for others in your family. In other words, in 2018, an employer-sponsored plan is deemed affordable as long as what you have to pay is not more than 9.56% of your household income.
Most job-based health insurance plans are deemed as affordable and meeting the “minimum value standard.” But if your options through your employer-sponsored health insurance do not meet the “minimum value standard” or are deemed not affordable, then you’ll be eligible for ACA subsidies if you also fall under the income brackets for those subsidies.
Note that if you enroll in a Marketplace plan and receive subsidies and then become eligible for coverage through your employer that meets these standards, you’ll need to do one of two things. 1. Cancel your Marketplace plan once you enroll in the employer-based plan. 2. Pay full price for your Marketplace plan if you decline your employer-sponsored coverage. If you keep the subsidies for your Marketplace plan after you’re eligible for an employer-based plan, you’ll have to pay back the subsidy amounts when you file your tax return the following year.

Can my family get ACA subsidies if we decline dependent health insurance through my employer?

The same rules apply if your employer-based plan allows you to enroll dependents but you find the cost too expensive and decline dependent health insurance.
The affordability metric only takes into account the insurance premium costs for the employee’s coverage. Because many employers contribute to their employees’ health insurance coverage, most plans end up categorized as affordable. And this categorization prohibits your eligible family members from getting ACA subsidies. Even if they could have qualified based on income and regardless of what percentage of your household income it would take to get the entire family covered under your job-based plan.
There are an estimated two to four million people in what has been named the “family glitch”. If this is your family’s situation, you’ll have to compare whether buying a full-priced Obamacare plan or adding your family to your employer-based plan is a cheaper option. You may also want to stay on the employer-based plan yourself while buying a Marketplace plan for your family. But keep in mind that having two plans for your family means having two sets of deductibles and out-of-pocket maximums. If you have children, you may also be able to get them insured via the Children’s Health Insurance Program (CHIP), depending on your income and the state you live in.
If your family decides to go uninsured after exploring all your options because even the cheapest way to get your entire family insured will cost you more than 8.05% (in 2018) of your household income, you’ll be exempt from paying the individual mandate tax penalty for not having health coverage for the year.