Q. My employer provides health insurance, but it’s very expensive. Can I decline this insurance and purchase a health plan through my state Marketplace instead?
A. Yes … but. Anyone is free to buy health insurance on their state’s Health Insurance Marketplace except for undocumented residents or people who are enrolled in Medicare Part A. And anyone is also free to turn down an employee health plan.
But the fact that your job comes with health insurance will probably mean that you can’t receive a tax credit to offset the cost of buying an individual Marketplace plan, even if you would otherwise be eligible based on your income.
One key is whether your workplace coverage is considered “affordable” under the terms of the health reform law. And it is considered affordable if the amount you would pay toward your coverage alone (not counting any family members) is less than 9.5 percent of your Modified Adjusted Gross Income. Note that this includes only your contribution toward the plan premium, not your out-of-pocket costs when you actually use the plan to get health care.
Another key is whether your employer health plan is designed to cover at least 60 percent of the health costs of the average member. If it is, then the law considers that it meets the “minimum value” standard. Your employer plan’s standardized Summary of Benefits and Coverage should have this information at the bottom of page 6. Your human resources department or plan administrator can give you a copy of this form if you don’t already have it.
If your employer plan fails one or both of these tests—either it’s not affordable or it doesn’t meet the minimum value—then you can turn it down and claim your subsidy to buy a plan on your state Marketplace.
If the plan passes both tests, you can’t get the tax credits. But you still might want to check out your options on the Marketplace to see whether you can get a better deal there anyway.
Submit a question to Consumer Reports’ health insurance expert. Be sure to include the state you live in so we can provide a more-detailed answer.
See our complete health insurance information. To find out how to apply for, select, and use health insurance, including Medicare, visit our main health insurance page.
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