Can an employer pay an employee .80 cents more an hour if they don’t accept the employers health plan, but are still covered by a spouses plan? I was hired and told they will pay me more per hour if I don’t enroll in there insurance. Now they want to take it away.


Employers can make healthcare arrangements to help employees with health insurance payments or simply just choose to pay an employee more taxable income. It's a choice left between the employer and employee, but there are a few important rules to follow.

Under the Affordable Care Act employers can't reimburse an employee for non-group health insurance and treat it as offering benefits and complying with the mandate. So an employer who must comply with the mandate can offer increased compensation, but can't treat it has a qualifying arrangement unless they offer a group plan.

An employer can be fined for reimbursing the cost of non-group coverage and can be fined if they have to comply with the mandate and an employee get's cost assistance on the Marketplace.

The bottom line: If an employer has to comply with the mandate the employer must offer a group plan and the employee can't get cost assistance.

Employers should read our page on employer health care arrangements for more information, employees can know that accepting increased compensation is fine as long as it's not being treated as a reimbursement for health insurance.

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Molly Cochran on

Answer Rating:

this was a very obscure and difficult question to find an answer on. on

We updated the answer to clarify. To summarize, employers can offer increased compensation rather than health insurance… but that compensation can’t be be used for purposes of complying with the mandate.

sharen on

So, if a company has and does offer medical insurance and you are covered by spouse insurance – can they increase my salary if I opt not to get my employer insurance. This was part of my salary benefits. Please advise is my employer can increase my salary if I opt NOT to get medical insurance… on

It is more complicated than that. The rules say an employer has to offer coverage or pay a fee if they have to comply with the mandate. The rules don’t say the employer has to offer cash instead of health benefits if health benefits are turned down. And, in general, the employee can choose how they get covered.

You would need to talk to your employer to better understand your options, there are too many complexities to make general overarching statements on every aspect of this, but the above is the gist.

Lance Dowdy on

if an employer gives extra pay to employees for turning down health coverage, does he have to offer it to everyone? on

I don’t know the answer to this one, good question.