Health insurance is one of the trickiest things to coordinate when starting a new job with a new employer, but it’s also something you can’t rush through. Finding a healthcare provider that puts the health and wellness of the patient first is important so that you get the proper care and treatment when you need it. Taking the time to understand when your health insurance kicks in at a new job can also help remove some of the stress associated with such a major life event.
This page provides an overview of the various aspects of employer health insurance and explains common terms so that you can make sure you’re adequately covered during every step of your career transition.
Find in this article:
- Does My Employer Have to Provide Health Insurance?
- What Are Waiting Rules for Workplace Insurance?
- Types of Marketplace Health Insurance Plans
- What if My New Employer Does Not Offer Insurance?
Does My Employer Have to Provide Health Insurance?
Due to the employer mandate under the Affordable Care Act (ACA), employers with 50 or more full-time employees or full-time equivalent employees (FTEs) are required to provide health insurance to at least 95% of those who work full-time. This health insurance coverage must meet criteria for minimum value and affordability.
Employers are also required to provide health insurance for the children of those full-time employees. In this case, “children” are considered those under 26 years of age, excluding stepchildren and foster children. Spouses are not considered dependents.
In some cases, the employer pays a portion of the monthly premium and the employee pays the rest. Other times, the employer will pay the entire monthly premium as an added benefit for the employee. Sometimes, the employer will go above and beyond and offer additional insurance benefits like vision plans, dental plans, and workplace wellness programs, but only the minimum described in the ACA is technically required by law.
If an employer fails to provide health insurance that meets criteria for minimum value and affordability, the employer is subject to penalties.
Employers with fewer than 50 employees are not required to provide health insurance for their employees.
What Are Waiting Rules for Workplace Insurance?
Many employers will offer health insurance plans to new employees on their first day, especially full-time employees. However, employers have the freedom to decide when health benefits kick in for new employees. Some may opt to have a waiting period for new employees, but there are limitations to how long an employer can wait. The ACA dictates that employers must not wait more than 90 days before offering health insurance. These 90 days include weekends and holidays.
Once eligible, employers will frequently offer a variety of health plans for you to choose from and you will be given a period of time, called a special enrollment period, to make your decision. If you fail to make a decision on a health plan within the special enrollment period, you will usually have to wait for the annual enrollment period.
Since the specifics of waiting rules can be different for every employer, it’s wise to contact the HR department of your new employer to make sure you understand the rules completely.
Types of Marketplace Health Insurance Plans
Plans are often sorted into four levels—Bronze, Silver, Gold, and Platinum—with Bronze offering the fewest covered services and Platinum offering the most. Generally, the more covered services a plan has, the more it costs.
Beyond the level of cover services offered, marketplace plans are often sorted into a few unique categories. Depending on the category you choose, you are potentially restricted regarding where you can go for healthcare services and how much you will end up paying out of pocket.
Health Maintenance Organization (HMO)
With a health maintenance organization, or HMO, you are covered if you choose from the approved list of local doctors, specialists, and hospitals. However, with an HMO, you generally are not allowed to go directly to any healthcare provider you choose. Generally, you first need to choose a primary care physician (PCP). If you get sick, you need to visit your PCP first. Your PCP will then refer you to an approved specialist within the HMO network if necessary.
If you decide to use a healthcare provider that is not within the approved network, or you decide to visit a specialist healthcare provider before you visit your PCP, you will usually have to pay for expenses out of pocket.
Exclusive Provider Organization (EPO)
An exclusive provider organization, or EPO, is similar to an HMO with one key difference: you are generally not required to visit a primary care physician (PCP) before you visit a specialist. Therefore, an EPO is a group health insurance option that can offer greater flexibility and potentially expedited care. Like an HMO, an EPO will generally not cover anything that falls outside the approved network of doctors, specialists, and hospitals.
Preferred Provider Organization (PPO)
Similar to HMOs and EPOs, a preferred provider organization, or PPO, will provide you with a list of doctors, specialists, and hospitals to choose from. However, in the case of a PPO, choosing from this list is not a strict requirement. A PPO will generally pay for at least some of the costs associated with healthcare providers outside of the approved network, whereas HMOs and EPOs will not.
If you choose a PPO and choose to go outside of the network, you may be forced to pay for the full cost of treatment, up to a certain deductible, before the copays kick in to assist with costs. This type of agreement is called “coinsurance”.
Health Reimbursement Arrangement (HRA)
A health reimbursement arrangement, or HRA, is when employers reimburse employees for qualified medical expenses up to a certain dollar amount every year. Oftentimes, unused reimbursement funds roll over to the next year.
Health Savings Account (HSA)
A health savings account, or HSA, is a special type of individual health insurance bank account that can be used only to pay for deductibles associated with medical expenses (but not premiums). These accounts differ from regular bank accounts in that they are funded on a pre-tax basis. Instead of paying taxes, receiving funds, and then using those taxed funds to pay for medical deductibles, you can instead receive money directly into your HSA and use it to pay for medical deductibles without first paying tax expenses.
What if My New Employer Does Not Offer Insurance?
If you quit or are terminated from a job that provides you with health insurance and you have a qualifying life event, you may have access to a special open enrollment period during which you can purchase your own health insurance plan (without any help from a new employer). To learn more about your options and check your eligibility, visit healthcare.gov.
Various options are available if your new employer does not offer insurance at all, such as if your employer has less than 50 full-time employees or full-time employee equivalents, or if you are working part-time for your new employer:
- The Consolidated Omnibus Budget Reconciliation Act (COBRA) may allow you to continue purchasing health insurance from your old employer’s plan, even if you are not technically employed with that organization. To learn more about COBRA, visit the U.S. Department of Labor.
- Various short-term health insurance companies exist to fill the gap between employers. These short-term plans are highly convenient as they often take effect the day after you enroll and you are usually able to cancel on a month-to-month basis. However, they lack some of the benefits associated with ACA-approved healthcare plans, such as pre-existing condition coverage, making them inefficient for long-term use. To learn more about short-term health care providers and how they stack up against COBRA, visit Investopedia.
Health insurance is a complex and important topic to understand. In times when healthcare services are needed, the last thing you want is a battle with an uncooperative company. Finding a health insurance provider that puts the patient first and simplifies the process will help you get the best care possible while reducing the amount of stress you experience.
Before selecting a particular plan from your employer, be sure you understand all of your deductibles, premiums, and out-of-pocket expenses that are associated with the plan. Additionally, be sure to understand when your health insurance will kick in. Finally, inquire about Medicaid, sick days, schedule for reimbursements, and availability of life insurance with regards to how these factors could affect your healthcare coverage. The HR department at your new employer should be able to answer all of these questions to help you get the right coverage for you in particular.