*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016. Please refer to the EPM for current health care program policy information. ***
Effective: March 1, 2008 |
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15.05.20.05 - Determining Employer-Subsidized Insurance (ESI) |
Archived: June 1, 2016 (Previous Versions) |
Employer-Subsidized Insurance (ESI) is coverage offered to employees for which an employer or union pays at least 50% of the cost of coverage. To be considered ESI for the employee, the employer must pay at least 50% of the employee’s portion of the cost. To be considered ESI for the employee’s dependents, the employer must pay at least 50% of the dependent portion of the cost.
Employer-based coverage may be offered for the employee only, employee and a certain number of dependents, or as family coverage including the employee and any dependents. Employer plans often use the term ”dependent coverage” to mean spouses and children, while the term ”family coverage” always includes the employee.
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.
To determine if coverage for an employee is ESI, first determine the total monthly premium for the employee’s coverage. Then determine how much the employer contributes. If the employer's share is 50% or more of the total, the coverage is ESI.
Follow these steps to determine if the employee has or had access to ESI:
1. Determine the total monthly premium for coverage for the employee only. This total will include the employer contribution plus the employee’s portion.
2. Determine how much the employer contributes to the employee coverage.
3. Determine the percentage of the total cost the employer pays for the employee's coverage. Divide the employer contribution (Step 2) by the total cost of coverage (Step 1).
n If the result is half (50%) or more than half of the total (Step 1), the insurance is ESI for the employee.
n If the result is less than half of the total (Step 1), the insurance is not ESI for the employee.
Example:
Fred applies for MinnesotaCare. Fred’s employer offers employee-only health coverage at $50 per month cost to Fred. The total cost of his coverage is $100 per month. The employer pays $50.
Action:
Determine if Fred has access to ESI.
1. The total monthly premium for employee-only coverage is $100.
2. The employer contributes $50 per month for Fred’s coverage.
3. Fred’s employer pays 50% of the monthly premium. (The employer contribution of $50 divided by the total cost of coverage $100 = 50%.) The coverage is ESI for Fred.
To determine if coverage for dependents (a spouse and/or children) is ESI, determine whether the employer offers dependent coverage. If the employer offers family coverage (employee plus dependents), identify the dependent coverage costs separately from the employee costs.
Follow these steps to determine if coverage for other household members is ESI:
1. Determine whether the employer offers dependent coverage. If so, go to Step 2.
2. Determine the full monthly premium for the dependents, excluding all amounts for employee-only coverage. This total will include the employer contribution plus the employee’s portion.
3. Determine how much the employer contributes to the dependent coverage.
4. Determine the percentage of the total monthly cost the employer pays for the dependent coverage. Divide the employer contribution (Step 3) by the total cost of dependent coverage (Step 2).
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 percentage the employer pays (Step 4) is half (50%) or more than half of the total (Step 2), the insurance is considered ESI for the dependents.
n If the percentage the employer pays (Step 4) is less than half of the total (Step 2), the insurance is not ESI for the dependents.
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 additional 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 for employee-only coverage 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 total monthly cost to add the dependents is $550.
3. The employer contributes $250 toward dependent coverage.
4. Joe’s employer pays less than 50% of the cost of coverage ($250/550 = .45, or 45%).
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 ($80/150 = .53).
John’s wife and his daughter have access to ESI.
John’s son does not have access to ESI because the employer offers no coverage for him.
Example:
Franny applies for MinnesotaCare with her two children. Franny’s employer offers employee-only health coverage and family health coverage (employee plus all dependents). The employer contributes $300 per month to the employee-only coverage, which has a total cost of $375 per month. The employer contributes $500 to family coverage, which costs a total of $900 per month.
Action:
Determine if Franny has access to ESI. (See Franny’s verification on the table below.)
1. The total monthly premium is $375.
2. The employer contributes $300. Franny would pay $75.
3. Franny’s employer pays 80% of the monthly premium. (300/375 =.80)
Franny has access to ESI.
Determine if Franny’s children have access to ESI.
1. The employer offers dependent coverage.
2. The full monthly cost of family coverage is $900. Subtract the employee-only coverage cost to find the cost of dependent coverage only. (900 - 375 = $525 for dependent coverage only.)
3. The employer contributes $500 to family coverage. Subtract what the employer pays for the employee only to find the employer’s share of dependent coverage only. (500 - 300 = 200 for dependent coverage only.)
4. Franny’s employer pays 38% of the cost of coverage (200/525 = .38). This is less than 50% of the cost of coverage.
Franny’s children do not have access to ESI.
Franny's Verification shows |
Employee Only |
Dependent Coverage |
"Family" Coverage |
Employee pays |
$75 |
$325 |
$400 |
Employer pays |
$300 |
$200 |
$500 |
Total Monthly Cost |
$375 |
$525 |
$900 |
ESI Calculation |
300/375 = .80 This is ESI. |
200/525 = .38 This is not ESI. |
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Example:
Havier, his wife Julia and their two children apply for MinnesotaCare.
Julia's employer offers health insurance for employees and their families.
Employee-only coverage costs $200 per month, which the employer pays in full.
The employer contributes $300 per month for employee + dependent coverage. The employer contribution is the same, regardless of the coverage chosen by the employee.
The premium for employee + 1 coverage is $350 per month.
The premium for employee + 2 coverage is $450 per month.
The premium for employee + 3 coverage is $550 per month.
Action:
Determine if Julia has access to ESI.
1. The total monthly premium for employee-only coverage is $200.
2. The employer contributes the entire $200.
3. Julia's employer pays 100% of the monthly premium.
Julia has access to ESI.
Determine if Havier and the children have access to ESI:
1. The employer offers dependent coverage.
2. The total monthly premium for employee + 3 is $550.
3. The total monthly cost for the dependents (Havier and the two children) is $350. (Employee + 3 coverage is $550 minus $200 employee-only coverage = $350 just for the dependents.)
4. The employer contributes $100 toward dependent coverage. ($300 total employer contribution minus $200 employer contribution for the employee only = $100 employer contribution for dependents.)
5. Julia's employer pays 29% of the cost of dependent coverage. (100/350=.29.).
Havier and the two children do not have access to ESI.