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Effective: December 1, 2006 |
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15.05.20.05ar1 - Determining Employer-Subsidized Insurance (ESI) (Archive) |
Archived: March 1, 2008 |
Employer-Subsidized Insurance (ESI) is coverage offered to employees for which an employer or union pays at least 50% of the cost of coverage.
If an employer offers cash benefits in lieu of providing coverage, offers an option of cash or coverage or is self-insured, see Determining ESI - Cash Benefits. For all others, follow the steps provided in this section.
Determine access to ESI separately for the employee and dependents.
Follow these steps to determine if the employee has or had access to ESI:
1. Determine the total monthly premium for the employee's coverage.
2. Determine how much the employer contributes.
3. Determine the percentage the employer pays of the coverage:
n If the employer share (Step 2) is at least half of the total (Step 1), the insurance is ESI.
n If the employer share (Step 2) is less than half of the total (Step 1), the insurance is not ESI.
Follow these steps to determine if other household members have or had access to ESI:
1. Determine whether the employer offers dependent coverage. If so, go to Step 2.
2. Determine the full monthly premium for the dependents.
3. Determine how much the employer contributes.
4. Determine the percentage the employer pays of the coverage:
Note: If the cost varies by the number of dependents, compare the total employer contribution to the total cost to determine if the coverage meets the ESI definition for all the dependents.
n If the employer’s share (Step 3) is at least half of the total (Step 2), the insurance is considered ESI.
n If the employer share (Step 3) is less than half of the total (Step 2), the insurance is not ESI.
Example:
Joe and Lisa apply for MinnesotaCare with their child. Joe’s employer offers employee-only health coverage at no cost to Joe. The total cost of his coverage is $150. The cost to add two dependents is $550, of which the employer pays $250.
Action:
Determine if Joe has access to ESI:
1. The total monthly premium is $150.
2. The employer contributes the entire $150.
3. Joe’s employer pays 100% of the monthly premium.
Joe has access to ESI.
Determine if Lisa and their child have access to ESI:
1. The employer offers dependent coverage.
2. The full monthly cost is $550.
3. The employer contributes $250.
4. Joe’s employer pays less than 50% of the cost of coverage.
Lisa and their child do not have access to ESI.
Example:
John applies for MinnesotaCare for himself, his wife, their 15-year-old daughter, and their 20-year-old son who is not a student.
John's employer offers health benefits for employees and their dependents up to age 19 or age 25 for full-time students.
l The monthly cost for employee coverage is $80 for which the employer pays the full cost.
l The monthly cost for dependent coverage is $150 for which the employer contributes $80 and the employee must contribute $70.
Action:
Determine if John has access to ESI:
1. The total monthly premium is $80.
2. The employer contributes the entire $80.
3. John’s employer pays 100% of the monthly premium.
John has access to ESI.
Determine if John’s wife and their child have access to ESI:
1. The employer offers dependent coverage, but their son is not eligible for this coverage due to his age and school status.
2. The full monthly cost for John’s wife and daughter is $150.
3. The employer contributes $80.
4. John’s employer pays 53% of the cost of coverage.
John’s wife, and his daughter have access to ESI.