Can you decline the health insurance plan from the employer?

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You can decline your employer’s health insurance, but think through your budget and options firs t—individual plans can be pricey, whereas a chunk of the premiums for employer-sponsored plans are paid by the employer. Individual plans might be worth it if your employer’s plan doesn’t meet your needs, like covering certain doctors or benefits, or if you qualify for subsidies that make a Marketplace plan more affordable.

You can find an individual plan through the Healthcare.gov marketplace, directly from a private health insurance company, or through another source, such as Medicare or Medicaid. Some people also get coverage under their spouse’s plan.

Should you get health insurance through your employer?

Employer-sponsored health insurance is often more affordable than an individual plan, but not always — and you may find an ACA plan with a better provider network.

Brian Colburn, senior vice president of corporate development & strategy at Waltham, Massachusetts-headquartered Alegeus, says that, despite the advantages of employer group insurance plans, many still choose to purchase individual health insurance.

“Often, this happens when the employee’s needs don’t match what the employer-sponsored coverage offers. If you have unique healthcare needs, desire doctors and specialists out of network, or want a more bare-bones plan, the individual marketplace can be a good alternative,” says Colburn.

Shopping for coverage at Healthcare.gov may be best if you qualify for an income-based subsidy. The ACA marketplace provides subsidies and tax credits to help people pay for ACA plans. The subsidies can save members hundreds of dollars each month, but they aren’t available for plans outside the ACA marketplace.

If you are self-employed or do not have affordable options at work, an individual ACA or private marketplace plan may be your best option.

Can you decline employer-sponsored health insurance coverage?

Employers typically offer health insurance as part of their benefits package, but they usually don’t require employees to enroll in it. You can decline or waive this benefit and get your own insurance.

You may have to sign a waiver that you will be obtaining another insurance plan or accepting someone else’s insurance coverage so that your employer has proof that you are insured for legal purposes.

If you decline or waive your employer-sponsored coverage, you can enroll the following year during your employer’s open enrollment period unless you qualify for special enrollment because of a qualifying event, such as getting married or having a kid.

Once you enroll in employer-sponsored health coverage and agree to have your premiums deducted from your paycheck, you generally cannot cancel your coverage midyear unless you experience a qualifying life event.

When you shouldn’t opt for an employer’s health insurance plan

Here are some situations where opting out of your employer’s group insurance and purchasing your own health insurance might be a better choice.

Your employer’s plan is too pricey. If your employer doesn’t chip in much for premiums, an individual ACA plan, with potential subsidies, might be more affordable.
Your spouse has better coverage. Many people skip their employer’s plan if a spouse offers a cheaper option with better benefits.
The coverage isn’t great. Employer plans must cover at least 60% of medical costs. If yours doesn’t offer solid coverage, it may be worth exploring other options.
You lost your job and got a COBRA offer. COBRA lets you keep your work plan, but you pay the full cost. Losing your job triggers a 60-day special enrollment period to shop for other plans.
Family coverage is too expensive. If premiums for family coverage exceed 9.5% of your income, you won’t get subsidies, but it’s still worth shopping around for a better deal.
Your doctors aren’t in-network. Not all providers accept every plan. If your preferred doctors aren’t covered, you could face higher out-of-pocket costs.

When you should opt in for an employer’s health insurance plan

Your employer pays most of the premium. If your employer covers a large portion of the cost, the plan is likely cheaper than buying coverage on your own.
The plan meets your health needs. If the coverage is solid — reasonable deductibles, copays, and a strong provider network — it can be a good all-around option.
You don’t qualify for ACA subsidies. If your income is too high for tax credits on the marketplace, your employer’s plan may be more cost-effective.
You’re healthy and don’t need many extras. For people without ongoing medical needs, a basic employer plan might offer just the right level of coverage.
It’s easy and automatic. Enrolling through work means no extra paperwork, and premiums come straight out of your paycheck, often pre-tax.

How are group and individual health insurance different?

For employer-sponsored coverage, employers decide on the health insurance company, network, copays and deductibles. This health coverage is only provided to those currently employed and their dependents and isn’t individualized.

However, people may find coverage for individuals and families through the ACA exchange or directly from insurance companies that better fit their needs. That way, they can choose the copays, out-of-pocket costs and benefits that make sense to them, such as a health maintenance organization (HMO) or preferred provider organization (PPO)

Here is how an employer-sponsored plan compares to other health coverage options:

Plan	Pros	Cons
Employer-sponsored health insurance	– Employer helps pay so it can be more affordable than other options – You can usually add your spouse and dependents to the plan	– Limited to your employer’s choices – Coverage is limited to your employment, so if you lose your job, you can get COBRA, which is expensive, or you have to find another plan
ACA plan through the marketplace	– ACA marketplace offers multiple options in most parts of the country – Gives you more flexibility to find a health plan that may fit your needs – If you qualify for subsidies, you may find a plan more affordable than an employer plan	– Without subsidies, ACA plans can be pricey – Most areas have multiple ACA plans of varying benefit design and costs Some parts of the country have limited options – ACA plans often have limited provider networks
Individual plan outside the marketplace	– More choices, but takes some digging to see which plans are offered in your area – You’re not as limited as with other options, but it also requires you to work directly with the insurance company	– No subsidies, so these plans are usually more expensive than ACA plans or employer plans
Medicare	– Multiple Medicare Advantage plans are offered by private insurance companies and Original Medicare – Most have options with different benefit designs and costs	– Must meet age or disability requirements to qualify for Medicare
Medicaid	– Most affordable option – Comprehensive coverage for little to no money – Costs based on your income	– Must meet the income requirements to qualify – Members usually can’t choose between plans – You may have trouble finding providers that accept Medicaid in your area

You can choose to decline your employer’s health insurance, but make sure to carefully evaluate your budget and alternative options before making a decision. Individual health plans can be significantly more expensive than employer-sponsored coverage, especially if your employer contributes to premiums.

However, you might opt for an individual plan if the group coverage doesn’t meet your needs, such as providing insufficient benefits for your medical situation or not covering your preferred doctors.

Erik Martin

Contributing Researcher

Erik J. Martin is a Chicago-based insurance expert and journalist with 27 years of experience covering insurance, personal finance and real estate. He helps consumers understand complex financial topics—from choosing the right car insurance policy to managing household budgets—through clear, practical guidance.