Effects to Employer-Based and Personal Plans Under the Affordable Care Act

or most people with employer coverage, direct effects of the health care law will be minimal. Basically all employer plans meet minimum essential coverage standards, so if you have a health care plan and like it, you won't have to take additional steps (this includes coverage through COBRA). You'll get the same new rights, benefits and cost controls extended to all Americans under the health care law.

If you don't want to enroll in a health insurance plan offered by your employer, you may use the Health Insurance Marketplace to switch. However, if you're eligible for insurance through your employer and it's considered affordable under the health care law (meaning that your share for individual coverage is no more than 9 1/2 percent of your annual household income), you won't be able to get discounts on the marketplace, even if your income would qualify you otherwise. And without your employer's contribution, the cost for coverage may be much higher.

Those covered by COBRA already paying the full cost of coverage (no employer contribution) may be able to get lower costs through the marketplace.

About the employer mandate

Under the health care law, businesses with more than 50 full-time employees are required to offer health insurance to their employees and their dependents under the age of 26, starting in 2015. (Note: The health care law does not require businesses to offer coverage to an employee's spouse.)

Businesses that don't comply with the mandate risk fines triggered when an employee eligible for subsidies enrolls in marketplace coverage. This is called the employer mandate.


Most large companies already offer health insurance to their employees, so only a relatively small number of businesses will be forced to start offering health benefits.

Some concern has arisen about the possible indirect effects of the employer mandate. Businesses may choose to pare back benefits or reduce the types of plans they offer to cut costs – or choose to pay the penalty if it's cheaper than insuring employees. Whether this will be a serious concern can't truly determined until after the employer mandate takes effect in 2015. In the meantime, employers may look to readjust plans in light of the new standards.

If you have an individual plan

If you already have an individual, non-group insurance plan, you don't necessarily have to change insurances. However, it must meet the health care law's minimum essential coverage standards. For instance, if you are a freelancer or independent contractor who pays for your own individual health insurance policy, you could have only very limited coverage to save costs. This limited policy may not offer the level of coverage required under our new law. If that's the case, you may have to buy an upgraded plan and your costs may increase.

If you're thinking about switching plans, you can use the marketplace to compare and calculate prices – and may end up saving money if you're eligible for subsidies.

Because plans offered through the marketplace are required to offer a set of essential benefits, among other rules, it's possible your insurer may choose to pull out of a market or stop offering certain plans.

You can still purchase health coverage through an insurance agent or broker outside the marketplace, but those plans will not be eligible for subsidies.

AARP, American Public Health Association, Centers for Medicare & Medicaid Services, Consumer Reports, FAIR Health, Inc., HealthCare.gov, Internal Revenue Service, Kaiser Family Foundation, Medicaid.gov, Michigan Department of Community Health, Michigan Department of Insurance and Financial Services, U.S. Chamber of Commerce, U.S. Department of Health and Human Services, U.S. Department of Veterans Affairs.

Every effort was made to provide clear, accurate information about health care reform. We verified any information we had with first-tier sources – those who are involved in this change and its effect on our health care system. We also relied on well-respected national nonprofits, some who've done a masterful job of providing clear information to consumers. Our primary source of information was the Affordable Care Act's official website, HealthCare.gov. If you need additional information about how health care reform affects you, that would be your best place to start.

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