Covered California Q&A – Affordable Coverage, Minimum Value and Eligibility for Subsidies

Q:  My employer offers health insurance, but I don’t take it because it costs too much.  But, when I called Covered California they asked me if my employer offers “affordable coverage” that has “minimum value”?  What does this mean?  Can I still apply for health insurance through Covered California?


A: Yes, you can apply for coverage through Covered California, but you may not eligible to receive a premium subsidy.


Here’s the long answer…. There are two tests if your employer offers health insurance to determine if you are eligible for a subsidy.  The first test is affordability.  Your share of the monthly health insurance premium (your payroll deduction) for self-only coverage cannot exceed 9.5% of your household’s income.  If it exceeds 9.5%, then coverage is not considered affordable and you and your family are eligible for a subsidy.  However, most companies that offer health insurance to their employees do provide coverage that is affordable.  A good rule of thumb is if the employer is paying 50% or more of the employee only costs, coverage will be affordable.  So if you fail that test, the next test is whether or not the plan meets minimum value requirements.  Minimum value is a benefit level established by the Affordable Care Act that says the health plan must pay 60% of costs on average.  It will be more difficult for you to determine if you employer’s group plan meets minimum value, but most likely it does.

If the answer is yes to both of these, you can go to Covered California or a private carrier and buy insurance, but you will not be eligible for a subsidy.    It may be less expensive than the group plan, but you will lose any employer contributions unless you make some type of arrangement with your employer.


Here’s the short answer and easier solution…. Ask your employer to provide you with the Notice of Exchange and ask for Part B to be completed.  You can also find this information on Attachment C (page 24) of the Covered California application.  This will provide you with the information you need .  Once you have this information, call us at 800-788-2197 and we can assist from there.


AUTHOR - Ali Nagy