Affordable Care Act: Employer cannot pay for Exchange plan

Can my employer subsidize the cost of insurance purchased through the California Exchange?

West Coast Raisin


Dear West Coast Raisin, 

The answer is kind of yes, kind of no.  Let me explain.

Yes . . .

Your employer can pay you whatever he wants to.  He can calculate it any way that makes sense to him. Therefore, he could pay you an hourly rate plus some other amount that is (coincidentally) based upon how much your health insurance costs from the Exchange.  All of the money he pays you would be taxed as regular income.

No . . .

What your employer cannot do is pay directly for your health insurance from the Exchange.  In order to buy your insurance from the Exchange, you cannot have any employer-based plan offered to you.  Your employer paying for your plan would likely be viewed as an employer “plan” and therefore you would not be allowed to buy from the Exchange.  In short, an employer can only directly subsidize a plan that it offers – not someone else’s plan.

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Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.