Personal Finance
Moving from a Health Marketplace Plan to an Employer Plan
In the United States, health insurance coverage has largely been tied to employment. That’s why the Affordable Care Act (colloquially known as Obamacare) not only increased eligibility for employer-sponsored health insurance plans but also introduced insurance marketplaces where those who didn’t qualify for employer plans could find coverage and potentially claim a subsidy. However, because of this, those who have marketplace plans may need to cancel their current coverage once they become eligible for employer-sponsored insurance. What’s more, failure to make the move could cost you as you’ll be on the hook for any subsidy you receive for your marketplace policy when you no longer qualify for it.
That’s exactly the position my wife and I find ourselves in. After several years of being self-employed and purchasing health insurance via Healthcare.gov (and qualifying for a subsidy due to our adjusted gross income), my wife recently took a full-time W-2 job. In turn, we’ve had to navigate the process of switching coverage plans.
Should you find yourself in a similar situation, here are a few tips as you transition from a marketplace insurance policy to an employer plan.
3 Things to Do When Transitioning From Marketplace Health Insurance to an Employer-Sponsored Policy
Confirm your new plan start date
First, it’s important to note that most employers have a waiting period before you’ll actually be eligible to join their health insurance plan. Typically, this waiting period is 90 days. Ahead of that, you’ll probably also need to select which plan you want.
Because there is this waiting period, you won’t want to cancel your marketplace plan until your new plan kicks in. Furthermore, you should receive your new insurance card ahead of it taking effect — so it may be wise to keep an eye out for this and again confirm that you’re all set with your new plan.
Schedule cancelation for the marketplace plan
Originally, I figured I’d just go to the marketplace and cancel on the day that my new plan began. However, I then realized that this might mean paying for an extra month of coverage — and, as mentioned, that month could be extra expensive if I needed to pay back the subsidy.
Luckily, Healthcare.gov allows you to schedule a cancellation ahead of time. In fact, when I still tried to select the 1st as my cancelation date, it informed me that I should choose the end of the previous month instead. Lest you worry like I did that this could lead to a gap in coverage, the plan will still be in place until the end of the day you select. So, in essence, my marketplace plan will now expire at 11:59 p.m. on the 31st while my employer plan will go into effect at 12:00 a.m. on the 1st (let’s hope that nuance doesn’t come into play though!).
Once you schedule your cancelation, your Healthcare.gov profile will show a status banner that reads Terminated — but will also note the actual date that the plan will expire. While I have yet to reach my scheduled cancel date, I presume this bar will then switch to reading “Cancelled” come the 1st.
Cash in any rewards or credits you may have
Finally, before your current plan does end, you may want to get any last benefits out of it you can. In my case, my insurer offers a rewards program where you can earn points for completing various activities — most of which merely involve reading articles or watching videos related to everything from health and fitness to finance and work. Then, these points can be redeemed for a variety of prizes or cashed in toward premiums.
When it became clear that we’d be switching insurers, I made a point to rack up any last points I could. After that, I redeemed the points for a $25 credit to be added to my special Ambetter debit card — which I was then able to use to make a $25 payment toward my premium. Sure, $25 isn’t a ton of money overall, but it feels like a lot more when it’s free!
While I’m unsure what types of rewards or programs other insurers offer, if yours does have anything similar, it’s definitely a good idea to see what you can do about cashing your earnings before your cancelation date arrives.
In the excitement of getting a new job and signing up for an employer-sponsored health insurance plan, it can be easy to forget about taking care of your marketplace plan. The bad news is that failing to cancel your current plan can be costly (especially if you have a subsidy). But, the good news is that the Healthcare.gov site does make it easy to cancel your plan as you transition to the new one. So, rather than waiting, be sure to figure out when your employer plan will apply and schedule your current coverage policy cancelation ASAP.
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