Marketplace vs. Employer-Sponsored Health Insurance: Which Is Right for You?

Medical costs seem like they’re always increasing. This means some individuals needing medical care face a financial barrier when attempting to get it. Many healthcare providers may even seem hesitant to schedule you for an appointment out of concern you won’t be able to afford the out-of-pocket costs, including the initial and follow-up visits, blood work, imaging, medications, and anything else you might need without it. This leads many people to seek out coverage, looking for assurance they can receive the medical care they need. But with marketplace and employer-sponsored health insurance as options, how do you decide which of these is right for you?

Understanding When Employer Must Offer Insurance

A common misconception is that one of the benefits of working full-time is that it automatically means you’ll be eligible for employer-sponsored health insurance, also commonly referred to as a group benefits plan. That’s not the case.

In fact, according to the U.S. Department of Health and Human Services, small businesses, which it describes as ones with less than 50 full-time employees, don’t have to offer coverage to their employees per federal law. On the flip side of the coin, any company with more than 50 employees must either offer health plans or make a Shared Responsibility Payment.

Of course, companies with far fewer employees than 50 and that even employ part-time workers may offer health insurance, as many do, as a way of attracting and retaining personnel. Although not required to do so, some smaller businesses with between one and 50 full-time employees do offer workers health and dental coverage through the Small Business Health Options Program (SHOP). However, since offering coverage to employees isn’t mandated, many workers, perhaps like you, seek out their insurance in the Health Care Marketplace.

What Exactly is the Health Insurance Marketplace?

Also simply known as the “marketplace” or “health exchange,” the Health Insurance Marketplace is accessible at HealthCare.gov. It’s a centralized website most states use to allow for individuals seeking health insurance to shop for affordable coverage and apply for income-contingent subsidies to purchase coverage. Applicants can learn if they qualify for Children’s Health Insurance Program (CHIP) or Medicaid benefits through the marketplace as well.

Pros and Cons Associated with Having Employer-Sponsored Health Insurance

The idea of an employer offering a group benefits plan appeals to many workers for some of the following reasons:

• Employers share in the cost of your insurance premiums: This means that you don’t have to cover the entire expense to secure coverage, which can be thousands of dollars even if you don’t use it on your own.
• Your employee contribution toward coverage may be tax-free: You read that right. Deductions made from your paycheck that go to paying your insurance premium are free from federal taxation, which can drop you to a lower income bracket, meaning you owe less taxes each year.
• You avoid having to sort through and decide among different health plans: Are you a bit indecisive? Well, then, the fact that your employer makes decisions about what insurance company, plans, and deductibles you’re going to have may work for you. You can generally expect employers to make decisions about the coverage they offer behind the scenes and for you to just say yes or no to that offering.

Downsides associated with getting insurance through your employer include:

• Your customization choices are limited: You don’t have a choice as to the insurance company, and sometimes even plans, premiums, and deductibles you’ll be responsible for paying
• How much your employer pays may not help much: The amount your employer offers to contribute to your premium may be too little considering what the overall cost of coverage is, making it unaffordable for you
• Your insurance goes hand-in-hand with your employment: You generally lose your coverage after quitting your job

Benefits and Disadvantages of Acquiring Insurance in the Health Insurance Marketplace

Just like there are many good and bad aspects to acquiring an employer-provided health plan, there are ones that apply to coverage secured through the exchange as well. Let’s start with the positives of getting individual or family health plans via the marketplace. Those include:

• Coverage options fit most budgets: There are many Affordable Care Act (ACA) plan options to fit a wide range of budgets, including coverage that insureds buy outright to government-sponsored programs for low-income individuals (in other words, you have more control over price)
• You don’t have to switch health care providers: You can choose a plan that your preferred doctors are already in network with without having to consider finding someone new that accepts your employer’s selected plan

As for disadvantages associated with plans acquired via the health exchange, those include:

• Being wholly responsible for coverage costs: You have to foot the bill for your insurance premium all on your own (should you not qualify for a government subsidy to defer some of those costs).
• Most working individuals don’t qualify for premium subsidies: Most people who have jobs, especially if they live in a two-income home, will not meet the necessary income requirements to qualify for subsidies to help make marketplace plans more affordable.

Commonalities Between Employer-Provided and Exchange Insurance Options

While there are many differences between coverage options provided by employers and available via the marketplace, there is some common ground between the two options. Those commonalities include:

• You can get insurance even if you have a pre-existing condition: It used to be where insurers could deny you coverage if you had a pre-existing condition, which is a medical diagnosis that pre-dates your applying for coverage, but doing so is now illegal under the Affordable Care Act.
• You can’t buy or terminate coverage whenever you want: You must generally have a qualifying event, such as marriage or having a child, to be allowed to purchase or drop coverage outside of the open enrollment period, which generally begins at the beginning of November and runs into the first part of January each year or other employer-designated deadlines.
• Plans tend to have a delayed start: For example, an employer may require you to work for them for at least 60 days or several months before they allow you to join their insurance plan. And, when you purchase insurance in the marketplace, even if you buy it during the special enrollment period and pay right away, you generally have to wait until the first of the following month to be able to use that coverage.
• They must cover the ten essential health benefits: Individual plans acquired through the ACA marketplace and also small group plans must cover outpatient and emergency services, hospitalization, maternity and newborn care, mental and behavioral health along with substance abuse services, prescription drugs, rehabilitative and laboratory services, preventative and wellness services (including for chronic disease management), and pediatric services, without any annual cap.

How To Decide Between Insurance from Your Employer and the Health Exchange

We’ve tried to pull together as many positives and negatives associated with different health insurance coverage options as you may have above. However, we’re sure there are plenty of others that we didn’t capture that may also be relevant to your situation. So, we urge you to use the justifications outlined above as a point of departure for initiating your own research into the pros and cons of these plans. In the end, you may find that you have to prioritize certain factors over others to ultimately decide on the insurance options best for you.

At the Law Office of Matthew L. Sharp, we have long been advocating on behalf of clients involved in disputes with health insurers, including ones who engage in bad-faith insurance practices, like not processing claims on time or flat-out denying them despite being entitled to benefits. While we hope that you never have the misfortune of being mistreated by an insurer, we see it happen a lot. You can reach us by phone or email if you have a situation with either your Reno employer-provided or marketplace health insurance company similar to what we discussed above that you’ve tried to resolve to no avail, and we’ll advise you of your rights per Nevada law.