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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.

Can Spouse Opt Out of Group Coverage?

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Question: I work for a public school in which my employer pays for my health insurance. My wife is a homemaker and is on my insurance, but I pay the entire premium. My gross income last year was 27,000. Can my wife leave the insurance she currently has and shop on the exhange?

Answer: The IRS has ruled if one has “access” to employer-sponsored coverage they are not eligible for premium assistance in the exchange. So your spouse can opt out of your group coverage and shop at the exchange, but she will not be eligible for a subsidy.

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I disagree with the answer on this website - See - IRS Proposed Regulations

Example 2. Married employee with dependents. Taxpayers B and C are married and file a joint return for 2016. B and C have two children, D and E. In November 2015, B is eligible to enroll in self-only coverage under a plan offered by B’s employer for calendar year 2016 at a cost of $5,000 to B. C, D, and E are eligible to enroll in family coverage under the same plan for 2016 at a cost of $20,000 to B. B, C, D, and E’s household income is $90,000. Under paragraph (e)(3)(ii)(A) of this section, B’s required contribution is B’s share of the cost for self-only coverage, $5,000. Under paragraph (e)(1) of this section, B has affordable coverage for 2016 because B’s required contribution ($5,000) does not exceed 8 percent of B’s household income ($7,200). Under paragraph (e)(3)(ii)(B) of this section, the required contribution for C, D, and E is B’s share of the cost for family coverage, $20,000. Under paragraph (e)(1) of this section, C, D, and E lack affordable coverage for 2016 because their required contribution ($20,000) exceeds 8 percent of their household income ($7,200).

It appears that in the circumstances described by person posing the question, his wife does NOT have “affordable” coverage, therefore, 1) his wife can opt out of the employer plan, 2) his spouse can apply for coverage in an exchange and 3) most importantly, may qualify for a “subsidy” properly known as a “tax credit.”

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