Health Insurance When Starting a New Job: When Does It Begin?

A new job can be an exciting move, but it can also bring uncertainty regarding health insurance. This benefit is not always available, and what is provided widely varies among employers and plans. Does your new company offer health benefits, and when do they kick in? Before settling into your new duties, ensure you’re covered with necessary health protection.

When does health insurance start at a new job?

When health benefits kick in depends on your new employer’s policy. Often, businesses want new employees to work weeks or months before coverage kicks in. If your employer has 50 or more employees, by law, they must provide health insurance within 90 days.

You'll need to verify if a business with less than 50 employees offers health benefits.

Is there a waiting period for health insurance when starting a new job?

Most companies have a waiting period before providing health coverage. Some employers enroll new workers on the day of hire, while others provide coverage on the first day of the month after hire. If your company offers insurance, they must make it available within 90 days.

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Employee health benefits – what can you expect?

The Affordable Care Act (ACA) mandates businesses with 50 or more full-time employees provide health benefits to their employees. This coverage extends to the workers’ families, including children up to age 26. Your employer-sponsored health benefit may include a wide range of health insurance plans. The best type for you depends on the coverage you need and how much you’ll pay.

HMO

A Health Maintenance Organization (HMO) is a health insurance plan that uses a provider network of doctors, hospitals, and other medical professionals. HMO premiums are typically lower than PPO, but you can only use providers under contract with the HMO.

HMOs require you to choose a primary care physician (PCP) who will coordinate your care with other specialists as needed. Therefore, this PCP must give you a referral to see specialists. You would bear the total cost of any out-of-network care, except in emergency cases.

PPO

A Preferred Provider Organization (PPO) plan typically offers a larger network of healthcare providers than an HMO. You can choose doctors and save money using those within the insurer’s preferred network.

With a PPO, you won’t need a referral to see a specialist. However, you’ll pay a higher premium for this flexibility.

HDHP

A high deductible health plan (HDHP) is similar to a PPO. However, it typically has lower premiums and higher out-of-pocket costs. An HDHP can be combined with a tax-free health savings account (HSA) to pay for certain medical costs.

An HDHP carries a high deductible to meet before the plan pays part of your medical expenses. According to the IRS, plans with a deductible of $1,400 for an individual or $2,800 for a family qualify as an HDHP. This amount doesn’t apply to out-of-network care.

Employee health insurance costs – what you should know

Although your new employer offers health coverage, you will still be responsible for certain expenses. Understanding these costs and options can help you choose what works best for your budget and needs.

Premiums

Premiums are monthly payments to your health insurance company to keep your policy active. Premiums are due each month, regardless of your medical service use. The amount depends on your plan and the amount your employer pays.

Businesses sometimes deduct a portion of the premium from an employee's paycheck as a pre-tax deduction. The Kaiser Family Foundation’s 2022 Employer Health Benefits survey reported workers paid an average of $6,106 toward their premiums. Employers contributed an average of $22,463 toward their workers’ premiums that year.

Deductibles

A deductible is a certain amount you pay for medical expenses before your health insurance plan covers costs. HMO plans typically have low or no deductibles. Most PPO and HDHP plans do carry deductibles.

The Kaiser Family Foundation’s survey reports in 2022, employees paid an average of $1,763 for single coverage with an annual deductible. Employees at smaller companies paid $1,000 more on average.

A high-deductible plan may be your best option if you rarely need medical care. If you have a chronic condition requiring regular doctor visits, a plan with a higher premium but lower deductible may save you money.

Out-of-pocket

Out-of-pocket costs are health care expenses you pay.

Your plan will specify an out-of-pocket maximum, which is the most you have to pay for health services in a plan year. Once you reach this amount, the insurer will pay 100% for covered services. For 2023, the highest out-of-pocket maximum for a Marketplace plan is $9,100 for an individual plan and $18,200 for a family plan.

Certain expenses count toward your out-of-pocket maximum, such as:

• Deductibles
• Copayments
• Coinsurance

Conversely, some costs do not count toward your maximum, including:

• Premiums
• Non-network services
• Elective procedures
• Vision or dental care
• Non-essential health benefits

Can my employer refuse to offer health benefits?

An employer with fewer than 50 full-time employees is not legally obligated to provide health insurance. The law excludes part-time or seasonal employees. However, companies may offer other ways to help you manage your healthcare costs.

You can obtain minimum essential coverage (MEC) through the Marketplace or a private insurer. Small employers might contribute to your costs with a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) or an Individual Coverage Health Reimbursement Arrangement (ICHRA).