Health Insurance During Employment
1. Are employers required to provide health insurance to their employees?
Maybe, depending on the Employer. . The Affordable Care Act (“Obamacare”) requires that all businesses with 50 or more full-time employees provide health insurance to at least 95% of their full-time employees and dependents up to age 26, or pay a fee. This health insurance, usually offered through a group plan, provides benefits to the people who belong to the group (for example, all of the workers at a particular job.) The benefits often include payment toward hospitalizations, physician care, and prescription medicines. Other than under Obamacare, employers are not required to provide health and welfare benefits to employees.
Exception: In selected cities, where local governments have enacted living wage ordinances, if an employee is working for a government employer or an employer that has a contract relationship with the city or county, the employee may be entitled to employer-paid health benefits or an increase in hourly wage so that the employee can independently obtain health insurance. San Francisco’s Health Care Security Ordinance (“HCSO”) requires employers who have at least 20 employees to pay a certain amount of money on the health care of their employees, either through paying the employees’ health care premiums, contributing to the employees’ health benefit flexible spending account or reimbursing fees incurred by employee who received direct health services. To be covered by the HCSO, an employee must have worked for his/her employer for 90 calendar days and must work at least 10 hours per week in San Francisco.
2. If my employer does not provide health insurance benefits or if I am working only part-time or unemployed is there anything I can do to get health insurance?
Yes. Several programs are available for people without insurance in California.
Medi-Cal is California’s joint federal-state Medicaid program that provides free or low-cost health coverage. In general non-elderly adults with household income up to 138 percent of Federal Poverty Level (“FPL”), pregnant women with household income up to 213 percent of FPL, and children from birth through age 18 with household income up to 266 percent of FPL qualify for Medi-Cal. You can also get Medi-Cal if you fall within certain categories. To see if you are eligible for Medi-Cal, contact the Department of Health Care Services.
Children’s Health Insurance Program (“CHIP”) may provide health coverage to children in families that do not qualify for Medicaid. Similarly, Medi-Cal Access Program (“MCAP”) may provide health coverage to pregnant women with household income more than 213 percent of FPL.
Covered California Health Exchange (“Covered California”) is the California agency offering subsidized health insurance plans in accordance with the Affordable Care Act (also known as “Obamacare” – see above). Covered California helps individuals and families obtain health coverage that includes the minimum essential benefits required by Obamacare. If your household income is at or below 400 percent of FPL, Covered California may qualify you for subsidized plans with reduced premiums. If your household income is between 138 percent and 250 percent of FPL, Covered California may qualify you for extra discounts that reduce their cost for medical services (called “Cost Sharing Reductions”).
CoveredCA.com is a single online portal for the application of the programs described above (Medi-Cal, CHIP, and Covered California). It is a joint partnership between Covered California and the Department of Health Care Services. To see which program you may be qualified for, visit www.Covered CA.com.
Note: Even if you are not eligible for any of the above, your city may provide additional health coverage. For example, San Francisco’s Department of Public Health operates a program (called “Healthy San Francisco”) that provides health coverage to San Francisco residents if they are uninsured, ineligible for Medi-Cal or Medicare, and if their household income is at or below 500 percent of FPL.
3. If an employer voluntarily provides health insurance benefits, are there any laws that cover those benefits?
The Employee Retirement Income Security Act of 1974 (ERISA) governs employer-provided health benefits if an employer voluntarily provides insurance to employees. Under ERISA, employers must provide a Summary Plan Description (SPD) to employees who participate in the plan. The SPD is usually a small pamphlet or other document that explains what the plan provides and how it operates. It provides information on when an employee can begin to participate in the plan, how service and benefits are calculated, when benefits become “vested” (or guaranteed), when and in what form benefits are paid, and how to file a claim for benefits. The employer must provide the SPD to the employee free of charge within 90 days after an employee becomes a plan participant or within 120 days after the plan is established. If the plan changes, the employer must inform the employee through a revised SPD or in a separate document called a Summary of Material Modifications that must be provided to the employee free of charge.
Health and welfare benefits provided by employers are exempt from ERISA’s minimum participation, vesting, benefit-accrual and minimum funding requirements that apply to employer-provided pension benefits.
4. If my employer voluntarily provides health insurance benefits, is it obligated to provide benefits to all employees?
Maybe, depending on the employer. Employers covered by Obamacare (see above) must provide health insurance to at least 95% of their full-time employees and dependents up to age 26. Otherwise, an employer is free to cover some, as opposed to all, of its employees. For example, salespersons can be excluded from an insurance plan while administrators are covered.
Exception: If an employee is entitled to participate in an employer-provided health benefits plan under ERISA, an employer may not wrongfully deny participation. (For example, an employer cannot deny health insurance benefits to workers based on their national origin.) To qualify, an individual must be classified as an employee, not a temporary worker or independent contractor and must be eligible to receive benefits according to the terms of the plan.
5. Is my employer required to provide medical benefits to my spouse, domestic partner or dependent children?
Much like employers are not required by law to provide health and welfare benefits to employees, they are equally not required to provide those benefits to spouses, domestic partners or dependent children. If, however, an employer voluntarily provides spousal benefits through an insurance provider or health maintenance organizations (HMO’s), the employer must also provide those same benefits to registered domestic partners of the covered employees. That’s because AB 2208 requires equal treatment of spouses and registered domestic partners in all aspects of insurance coverage. (The terms and the extent of coverage, as well as the application process, must therefore be identical, too.)
Note: AB 2208 applies to insurance providers and HMO’s who supply insurance to an employer’s employees, but does not apply to employers who self-insure, who are not required to provide equal domestic partner coverage to their employees.
6. Once I am receiving benefits, can my employer terminate them?
Yes. An employer may at any time amend the terms of an existing plan, including termination of the plan. Additionally, an employer may reduce or terminate health benefits of retired former employees who become eligible for Medicare Benefits without violating the Age Discrimination in Employment Act.
Exception: An employer may not terminate, suspend, discipline, discriminate, or take any adverse action against the employee for exercising his or her rights under a plan or ERISA, or for giving information or testimony in an investigation or proceeding relating to ERISA.
7. If I file a claim for health benefits under a plan provided by my employer and it is denied, what can I do?
If you believe that there has been a violation of the plan (e.g., benefits were not paid according to the plan), you may bring an ERISA claim against your employer through an internal administrative claims process that is described in the SPD.
Additionally, a person also may appeal to the Secretary of Labor of the Department of labor for certain ERISA claims. The Department of Labor however, only assists claimants informally for non-ERISA based claims.
If you are unsure if your claim is non-ERISA based and whether you should bring a claim through the internal process or through the Department of Labor, you can refer to your SPD, which explains the administrative resources available to participants in the plan.
8. Do I qualify for health insurance after I lose my job? What about my family?
Maybe, depending on the employer. The federal Consolidated Omnibus Budget Reconciliation Act (“COBRA”) generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called “Continuation Coverage”) in certain instances where coverage under the plan would otherwise end. COBRA gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for a limited period of time after a qualifying event such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.
For example, if your portion of the health plan premium is $200 per month and your employer contributes $300 per month towards your plan, the total cost of your plan is $500 per month. If you choose to get Continuation Coverage after a qualifying event, it could cost you up to 102 percent of $500 (your plan’s monthly premium), which is $510, every month. Although some employers choose to subsidize Continuation Coverage, most employers do not, in which case you will be responsible for the entire premium.
For job loss and reduction in the hours, Continuation Coverage usually lasts 18 months. If certain conditions are met in cases where a qualified beneficiary is determined to be disabled for purposes of COBRA, this period may be extended to 29 months. For death of a covered employee, divorce (or legal separation), the spouse and dependent child can get Continuation Coverage for up to 36 months. If a dependent child loses his/her dependent status, the dependent child can get Continuation Coverage for up to 36 months. If the covered employee becomes eligible for Medicare, he/she can get Continuation Coverage for up to 36 months. Note that after the first 18 months, the rate could be up to 150 percent of the original premium (up to $750 if the original premium is $500).
If you are employed by a business with 2-19 employees, you are eligible for Continuation Coverage for up to 36 months under Cal-COBRA. Also, if are employed by a business with 20 or more employees and your federal COBRA Continuation Coverage was 18 months, Cal-COBRA can provide you with additional 18 months of Continuation Coverage. Just like federal COBRA, qualifying events for Cal-COBRA include voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, etc. The rate of Cal-COBRA Continuation Coverage for the first 18 months is up to 110 percent of the original premium (up to $550 if the original premium is $500), then 150 percent (up to $750 if the original premium is $500).
There is no requirement that you work for your employer for a certain amount of time before you are entitled to a COBRA/Cal-COBRA option. Your employer must offer you COBRA/Cal-COBRA Continuation Coverage even if you are already covered by another plan, such as your spouse’s plan through his or her job. (See our Fact Sheet titled Health Insurance After Employment: COBRA for more information).
Also, if you leave your job for any reason and lose your job-based insurance, you can choose to buy a marketplace plan. Losing job-based coverage, even if you quit or get fired, qualifies you for a Special Enrollment Period at Covered California. This means that you can buy insurance outside the yearly Open Enrollment Period. You can also apply for coverage any time during Open Enrollment, which takes place during January of each year.