What If I’m Self-Employed Then Get a Job That Offers Health Coverage? A Guide to Transitioning Health Insurance with ACA Plans

What If I’m Self-Employed Then Get a Job That Offers Health Coverage?

A Guide to Transitioning Health Insurance with ACA Plans

If you're self-employed and have been purchasing health insurance through the Affordable Care Act (ACA) Marketplace, getting a new job with employer-sponsored health coverage can create new questions about your options. Understanding how to transition from an ACA health plan to your new job-based insurance is key to maintaining continuous coverage and avoiding penalties.

In this blog, we'll explore what happens when you transition from self-employment to a job with employer-provided health coverage and how you can smoothly make the switch without losing access to essential healthcare.

What Happens to My ACA Health Plan When I Get Job-Based Coverage?

When you’re self-employed, you're responsible for finding and maintaining your own health insurance, often through the ACA Marketplace. However, once you get a job that offers health insurance, your situation changes. Generally, if your employer offers coverage that meets the minimum value and affordability standards under the ACA, you’ll no longer qualify for premium tax credits or other subsidies.

Here’s how the transition typically works:

1. Employer-Sponsored Health Insurance: Once you’re eligible for health insurance through your employer, you’ll have the option to enroll in their group plan. If you accept this offer, your ACA health plan will not automatically end—you'll need to take steps to cancel your Marketplace coverage if you no longer need it.

2. Loss of Premium Tax Credits: If your job-based health insurance meets the ACA’s affordability standards, you’ll lose eligibility for any premium tax credits or cost-sharing reductions you may have been receiving for your Marketplace plan. These subsidies are only available if your income qualifies and you don't have access to affordable employer coverage.

3. Coordination of Coverage: If you choose to keep both your ACA plan and job-based coverage, you'll likely pay full price for the Marketplace plan without any subsidies, which could be costly. Most people in this situation opt to switch to their employer’s health insurance.

What Should I Do If I Get a Job with Health Insurance?

If you’re transitioning from self-employment to a job with health benefits, here’s what you should do to ensure a smooth transition:

1. Compare Your Coverage Options: Review your employer’s health plan options and compare them to your current ACA plan. Look at key factors such as monthly premiums, deductibles, out-of-pocket costs, and covered services. If your job-based coverage is more affordable or comprehensive, it may be the better option.

2. Check Your Premium Tax Credit Eligibility: Once you’re offered job-based coverage, you’ll likely lose eligibility for ACA subsidies. Use the Marketplace or work with a broker like Aura Insure to estimate your new premium costs if you were to stay on an ACA plan.

3. Cancel Your ACA Plan: If you decide to switch to employer-sponsored coverage, be sure to cancel your ACA plan to avoid paying for two health insurance policies at the same time. You can do this through your Marketplace account or with the help of an insurance broker.

4. Coordinate Enrollment Periods: Most employer-sponsored plans have a specific enrollment period when you can sign up. Make sure you align your cancellation of your ACA plan with the start date of your job-based coverage to avoid any gaps in your health insurance.

Can I Keep My ACA Plan and Decline Job-Based Coverage?

You can technically keep your ACA health plan if you decline your job-based coverage, but there are important financial implications to consider. Here’s why:

- Loss of Premium Tax Credits: If you have access to affordable employer-based insurance, you are no longer eligible for premium tax credits or cost-sharing reductions, even if your household income is low. This means you’ll have to pay the full cost of your ACA plan without any subsidies.

- Higher Costs: Since you’ll lose access to ACA subsidies, maintaining your Marketplace plan without assistance could be more expensive than enrolling in your job-based plan. Most people find it more cost-effective to switch to their employer’s health insurance.

Special Enrollment Periods for Job-Based Coverage

When you start a new job with health coverage, you’ll typically have access to a Special Enrollment Period (SEP) for both your employer-sponsored plan and the ACA Marketplace. This SEP allows you to:

- Enroll in your job’s health insurance outside the regular Open Enrollment Period.

- Cancel your ACA plan and avoid double coverage.

Be sure to ask your employer about the timeframe for enrolling in your new health plan, as SEPs generally last for a limited period after you become eligible.

What if My Job-Based Coverage Isn’t as Good as My ACA Plan?

In some cases, you may find that your employer-sponsored health plan is not as affordable or comprehensive as your ACA plan. While it’s uncommon, there are scenarios where an employer’s health plan may be more expensive for you, especially if the coverage doesn’t meet the ACA’s minimum value or affordability standards. Here’s what to do:

1. Check If Your Job-Based Plan Is Affordable: According to the ACA, an employer-sponsored plan is considered affordable if the cost of the plan’s premiums for employee-only coverage is no more than 9.83% of your household income. If your employer’s plan is more expensive than this, you may still qualify for subsidies through the ACA Marketplace.

2. Look for Alternatives: If your employer’s health plan doesn’t meet the ACA’s standards, you can decline it and continue with your ACA plan and still receive subsidies. However, you must demonstrate that your employer’s coverage is not affordable.

Why ACA Plans Are a Good Backup Option for the Self-Employed

If you're self-employed, ACA plans provide essential coverage during periods when you don’t have access to employer-sponsored insurance. These plans are designed to be flexible, offering comprehensive benefits that meet the healthcare needs of individuals without job-based coverage.

In the event that you transition from self-employment to a job with health insurance, knowing how to navigate the switch can help you stay protected while minimizing costs.

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Get Help with Your Health Insurance Transition at Aura Insure

Whether you're transitioning from self-employment to a new job or simply exploring your health insurance options, Aura Insure is here to help. Our team of experts can guide you through the process, compare your ACA plan with job-based coverage, and ensure you make the best decision for your healthcare needs.

Contact Aura Insure today to get personalized advice and explore your health insurance options!