In the U.S., a majority of people under the age of 65 have health insurance coverage through an employer-sponsored health plan either from their own job or through a family member, such as a spouse or parent. However, not all employers offer health insurance to their employees. With most job-based health insurance plans, the employer pays a portion of the premiums, and an employee's contribution is paid on a pre-tax basis.
Federal law requires certain protections for people in job-based group health plans. For example, individuals and their family members generally cannot be denied eligibility or benefits, or charged more than similarly situated individuals, because of a health factor under an employer-sponsored group plan. [Note: there is an exception for certain employer workplace wellness programs that vary premiums based on achieving certain health goals].
Prior to the Affordable Care Act, employers could impose a pre-existing condition exclusion period for up to one year, but starting in 2014, job-based plans are not allowed to exclude coverage for pre-existing conditions.
Most employer plans require employees to sign-up for coverage during a specific time of year, known as an annual open enrollment period.
But when certain life events occur (such as marriage or the birth or adoption of a child) or a person loses other coverage, a "special enrollment" opportunity outside of the yearly open enrollment period must be offered by the group plan. Individuals generally have 30 days from the date of the triggering event to request a special enrollment.
More information about rights and protections in employer-sponsored health insurance is available from the U.S. Department of Labor at https://www.dol.gov/agencies/ebsa or by visiting www.healthcare.gov.
To provide health insurance, some employers purchase a health plan from an insurance company (these are "fully-insured plans"), or the employer itself collects premiums from enrollees and takes on the responsibility of paying employees' and dependents' medical claims (these are "self-insured plans"). Federal law that protects people in employer-sponsored group health plans applies to both fully-insured and self-insured group health plans.
Additional state protections apply to fully-insured group health plans. Health insurance laws in 46 states and the District of Columbia require health plans regulated by state governments (fully-insured plans) to offer or provide coverage for diabetes medications, supplies, and services.
Affordable care act
The Affordable Care Act (ACA), the federal health reform law enacted in March 2010, provides some new protections for people in employer-sponsored health plans. In addition, new coverage options are available for people who leave their job or lose job-based coverage.
New protections that pertain to employer-sponsored group health plans include:
- Coverage for Young Adults: Young adults can stay on their parent's insurance plan until age 26 as long as the policy covers dependents.
- Free Preventive Care: Most health plans are required to provide certain recommended health services aimed at preventing disease at no charge. [Note: This requirement does not pertain to "grandfathered" plans (group plans that were created on or before March 23, 2010)].
- Essential Health Benefits: A minimum set of "essential health benefits" like hospitalization, prescription drugs, preventive services, and chronic disease management must be covered by all new individual and small group plans starting in 2014. [Note: This requirement does not apply to grandfathered plans, self-insured plans or large employer plans].
- No Lifetime Dollar Limits on Coverage: Health insurance plans cannot set a dollar limit on the amount the insurance company will spend on "essential health benefits" over the course of the time a person is enrolled in that plan.
- Summary of Benefits and Coverage: Individuals have the right to get a plain language summary (called a Summary of Benefits and Coverage, or SBC) of a health plan's benefits to help them better understand the plan's coverage and compare plans. Plans must provide the SBC when a person is shopping for coverage, when there is a major change in benefits, or anytime a person asks for it.
Learn more about health insurance protections under the ACA which affect people with diabetes by reading our fact sheet "Health Insurance Update: Protections for People with Diabetes". You can also learn more at www.healthcare.gov.
New requirement for large employers
As a result of the ACA, in 2016, large employers (those with 50 or more full-time equivalent employees) will have to pay a penalty if they do not offer health coverage or offer coverage to fewer than 95% of their full-time employees and their dependent children, and have at least one full-time employee receive a tax credit to purchase coverage in the Health Insurance Marketplace.
In addition, if a large employer does not offer coverage to full-time employees that is considered to be adequate and affordable, and at least one full-time employee receives a tax credit to purchase coverage in the Health Insurance Marketplace, the employer must pay a penalty. Only employees who don't have an offer of coverage considered to be adequate and affordable, and who meet certain income requirements, will be eligible for financial help to buy a plan in the Health Insurance Marketplace.
Learn more about large employer requirements at www.healthcare.gov.
Health insurance marketplaces
A Health Insurance Marketplace (Marketplace) is available in every state where individuals and families can buy health insurance.
People who meet certain income requirements and who do not qualify for affordable job-based health coverage (or certain other types of coverage) are able to get financial help paying for a plan purchased in the Marketplace.
Learn more about things to consider when shopping for coverage if you have an offer of employer-sponsored coverage at www.healthcare.gov/what-if-i-have-job-based-health-insurance/ or by calling 1-800-318-2596.
The American Diabetes Association also has a fact sheet on the Marketplaces available at www.diabetes.org/HealthInsuranceMarketplaces or by calling 1-800-DIABETES (800-342-2383).
A "Small Business Health Options Program" (SHOP) Marketplace is also available in every state where small employers can buy health insurance coverage.
Learn more about the SHOP Marketplace by visiting www.healthcare.gov or calling 1-800-706-7893.
Requirement for individuals to have health insurance
Starting in January 2014, most individuals must have health insurance that is considered "minimum essential coverage" or qualify for an exemption. Otherwise, the individual will owe a tax penalty during the following year.
Any job-based plan as well as plans purchased in the Health Insurance Marketplaces, Medicare, Medicaid, state Children's Health Insurance Programs (CHIP), most TRICARE plans and the Veterans health care program, and certain other coverage meet this requirement.
If health insurance is not considered affordable for an individual, that person will qualify for an exemption from the tax penalty. Individuals who are uninsured for less than three consecutive months of the year also will qualify for an exemption from the tax penalty. Other exemptions exist.
Learn more about the individual requirement at www.healthcare.gov.
Losing your job-based coverage
If you lose your job-based health plan, you may have several options for coverage.
Purchase a plan in the marketplace
If you leave your job for any reason and lose your job-based coverage, you can buy coverage from your state Marketplace. This is true even if you leave your job outside the Marketplace open enrollment period which occurs every fall.
Through the Marketplace you can fill out an application online, over the phone, or in person to find out whether you are eligible for financial help paying for private health insurance coverage, or if you're eligible for coverage under your state's Medicaid or CHIP.
For more information on the Marketplace in your state, call 1-800-318-2596 or visit www.healthcare.gov.
COBRA continuation coverage
COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that may let you pay to keep you and your family on your employee health insurance for a limited time (18-36 months) after your employment ends or you lose coverage. You can be required to pay the full monthly premium, including any part of the premium that your employer had contributed, plus a 2 percent administrative charge.
Be aware: if you choose to buy COBRA continuation coverage, and then later decide you want to buy a plan through the Marketplace, you may have to wait until the next Marketplace open enrollment period in the fall to do so.
COBRA generally applies to group plans maintained by private-sector employers with 20 or more employees or by state and local governments. You have a limited time to elect COBRA. Contact your employer benefits administrator for questions about COBRA coverage options that may be available to you.
More information on COBRA is available through the U.S. Department of Labor by visiting www.dol.gov/dol/topic/health-plans/cobra.htm or calling 1-866-444-3272.
Note: Some states have passed "continuation" laws similar to COBRA which apply to group health insurance policies of employers with fewer than 20 employees. Contact your employer's benefits administrator or human resource department for additional information on the continuation policy that may be available to you. You can also contact your state insurance department to inquire about insurance requirements and consumer protections in your state.
Special enrollment into other group coverage
Another option may be a "special enrollment" into other group health coverage, such as a spouse or parent's job-based health plan. Generally you must request this within 30 days of losing other coverage.
TIP: It is a good idea to explore your options before you leave your job-based plan, if possible. Due to the requirement to have minimum essential coverage starting in 2014, individuals who are uninsured for three months or more of the year may have to pay a tax penalty the following year (unless they qualify for another exemption). Learn more about the new individual requirement at www.healthcare.gov.
Check with your employer to find out if group coverage is available in your workplace. When looking at your coverage options, check if the plan covers the diabetes supplies, services, and drugs you need, and what it costs.
For more information on fully-insured employer-sponsored health insurance or to find out what type of coverage laws exist in your state, you can contact your state's insurance department. Contact information for state insurance departments is available at www.naic.org/state_web_map.htm.
More information on federal protections for group health plans (fully-insured and self-insured) and consumer assistance for people in job-based plans is available from the U.S. Department of Labor. Contact the Employee Benefits Security Administration of the U.S. Department of Labor at www.askebsa.dol.gov or by calling 1-866-444-3272