Covered California Certified Enroller Practice Exam

What constitutes an employer-sponsored affordable health plan?

1. The employee's coverage costs more than 5% of household income

2. The employee's coverage costs more than 9.12% of household income

3. The employee's coverage costs more than 12% of household income

4. The employee's coverage costs less than 8% of household income

The correct answer is: The employee's coverage costs more than 9.12% of household income

An employer-sponsored affordable health plan is defined by how much employees are required to contribute toward the cost of their health insurance premiums relative to their household income. The key metric for determining affordability is that the employee's share of the premium must be no more than a specific percentage of their household income. In this specific context, an employer-sponsored health plan is considered affordable if the employee's contribution does not exceed 9.12% of their household income. This threshold is determined by federal guidelines and is used to evaluate the affordability of coverage. If an employee’s coverage costs more than this percentage, it is regarded as unaffordable, which may impact eligibility for premium tax credits or other assistance through health care exchanges like Covered California. Understanding this concept is critical, as it helps employees evaluate their coverage options and determine their eligibility for assistance based on their financial circumstances. The other options reference incorrect thresholds, which do not align with the federal definitions of affordability for employer-sponsored health coverage.