If you’re enrolled in a health insurance plan through the Marketplace in your state and you get a new job that offers certain kinds of health insurance, it’s important to understand how this will affect your eligibility for Marketplace subsidies, and how to cancel your Marketplace coverage.
Do I have to cancel my Marketplace plan when I get employer-sponsored coverage?
Subsidies are not available if you’re also enrolled in an employer’s plan. Subsidies are also not available if you’re eligible for affordable, minimum-value employer-sponsored coverage, even if you haven’t enrolled in the employer’s plan. So although you are not required to cancel your Marketplace plan when you enroll in an employer’s plan, you would have to pay full price for the Marketplace plan once you become eligible for coverage under the employer’s plan.
If you want to cancel your Marketplace plan, you should proactively ask to cancel your policy effective the day before your new coverage takes effect. (The timing on this might vary depending on where you live and the date that your new coverage will start. See more details below.) It’s not a good idea to let your policy lapse for non-payment of premium because that can result in you having to repay some premium subsidies to the IRS.
What happens to my Marketplace subsidies if I enroll in an employer-sponsored plan?
As of the month that you’re eligible to enroll in an employer-sponsored health plan that’s considered and that provides minimum value, you will no longer be eligible for any subsidies in the Marketplace. If you don’t cancel your Marketplace plan and the exchange continues to pay advance premium tax credits (APTC) on your behalf, you’ll have to repay some or all of that APTC when you file your tax return.
Will my new job affect the subsidies I received when I had Marketplace coverage?
Your Marketplace subsidy eligibility depends on your total household income for the year (an ACA-specific calculation of MAGI). So if your new job pushes your total annual income higher than you initially projected when you enrolled in the Marketplace plan, you might have to repay some or all of the premium subsidy that was paid on your behalf during the months you had Marketplace coverage. The fact that your income was lower during the months you had Marketplace coverage does not factor into the calculation, because subsidy eligibility is entirely based on annual income.
When can I cancel my Obamacare plan if I get a new job with health benefits?
You can cancel a Marketplace (Obamacare) health plan at any time during the year.1 (This differs from employer-sponsored health insurance, which can generally only be canceled during the employer’s open enrollment period or a special enrollment period.)
With limited exceptions, you can’t retroactively cancel your Marketplace health insurance.2 So you’ll want to request the cancellation in advance, aligning it with the start of your new employer-sponsored coverage. Depending on where you live, the rules for coverage cancellation will vary:
- You may be able to end your coverage as early as the day you submit the termination request, and that’s how it works in the states that use the federally run Marketplace (HealthCare.gov).
- Some state-run Marketplaces – Colorado is an example – will only terminate coverage on the final day of the month you submit the termination request.
- Federal rules allow state-run Marketplaces to require that you submit your termination request at least 14 days in advance of the date you want your coverage to end.2 California is an example of this.
Timing the cancellation of your ACA policy is critical
Under the ACA, employers can impose waiting periods of up to 90 days before new employees can enroll in the employer’s group health insurance plan. So be sure you understand exactly when your new plan will start before you initiate cancellation of your Marketplace plan.
You can cancel your Marketplace plan altogether or cancel coverage for just some members of the household while leaving other household members enrolled on the Marketplace plan. It’s advised that you contact the Marketplace call center if you want to disenroll some family members but not others.
Can I still buy Marketplace insurance if employer-sponsored insurance is available through my new job?
Yes. Having an offer of employer-sponsored health insurance does not prevent anyone from enrolling in Marketplace insurance. But if your employer offers health coverage that’s considered affordable and that provides minimum value, you won’t be eligible for any subsidies in the Marketplace. This is true regardless of whether you’ve enrolled in the employer’s plan.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
Footnotes
- “eCFR :: 45 CFR 155.430 — Termination of Exchange enrollment or coverage.” ecfr.gov. Accessed Feb. 23, 2024 ⤶
- “eCFR :: 45 CFR 155.430 — Termination of Exchange enrollment or coverage.” ecfr.gov. Accessed Feb. 23, 2024 ⤶ ⤶
