Employer Sponsored Coverage

Another requirement to be eligible for premium tax credits or cost sharing reductions is that you must NOT be eligible for qualifying employer sponsored coverage.

If your employer offers  you coverage that is at least as good as a bronze plan and the coverage is “affordable” as defined under the law, then you would not be eligible for premium tax credits or cost sharing reductions on the individual Marketplace.

A bronze plan is a plan with an actuarial value of 60%.  Employer coverage is considered affordable if your share of the cost for employee only coverage is less than 9.5% of what you make.

EECost Share

Again, if your employer offers you coverage that meets the requirements above, then you would not be eligible for subsidies on the individual Marketplace.

Warning:

Employers are NOT required to subsidize the cost of insurance for an employee’s family. If an employee’s coverage is deemed affordable; but the family coverage is not, NO ONE in the family is eligible for premium tax credits on the Marketplace.

Bigger Warning:

Large employers were originally mandated to provide health insurance to their full time employees as of January 1, 2014. In addition there were going to be required to report whether they offered qualifying health insurance to their employees on an employee by employee basis.

These requirements have now been delayed until January 2015; however, employers are encouraged to report in 2014 if the IRS issues instructions in time for this to be done.

What an earth does this mean?

It means that there is no mechanism in place for 2014 to determine verify what you say about the coverage you are offered by your employer.

It is likely that employers will not report what they are doing in 2014; however, some may choose to do so if they receive instructions from the IRS.

This means that many people may receive premium tax credits but don’t actually qualify for them. It also means that some may lose their credits later when it is learned that they never qualified; while others, will keep their credits because the actual facts will never be known. Some people may knowingly take advantage of the system; while others may make honest mistakes.

“If you think you will qualify for a substantial subsidy because you have very low income, be sure that you are not disqualified because you or your spouse is offered qualified employer coverage. If it was determined later that you did not qualify, your subsidy could be revoked making. If this happened your health insurance premium would go up and you could end up owing the IRS thousands of dollars.”

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