In an environment of ever-growing health care and insurance costs, insurance coverage is becoming critical for several employees. Surveys consistently show that employees value insurance benefits, especially others. Group health insurance is mostly better than the individual insurance policies.
There are two main reasons that employers offer insurance coverage. The primary is to draw in talented employees. The second reason is claimed to the first: to reduce employee turnover. It is not uncommon for workers to become “dependent” on their insurance. For instance, an employee who may otherwise leave their job to become self-employed might not do so due to health reasons. That is, they will not be eligible under a personal policy because of a preexisting condition. Preexisting conditions are typically not covered under individual insurance plans.
The primary difference between individual and insurance is that group plans are “guaranteed issue,” while individual plans are not. “Guaranteed issue” means an insurance company cannot deny coverage because of any preexisting medical conditions.
Some individual insurance plans are issued to individuals with preexisting conditions, but usually only with an “exclusionary rider.” This “exclusionary rider” will exclude coverage for treatment associated with the preexisting condition. For insurance coverage, premium cost-sharing between employers and employees has almost become a typical feature in today’s market. Within the overwhelming majority of cases, insurance companies require employees to pay a minimum of fifty of the premiums, although many like better to pay a far better percentage. Generally, the larger the corporation, the greater the share paid by the company. Not all insurance companies require coverage for dependents, although many businesses also elect to provide this coverage.
There are tax incentives available to both employer and employee for qualifying group insurance plans. Employers can typically deduct 100% of the premium costs while employees pay their portion of the monthly premiums with pretax dollars. Both practices may end in significant savings over a year.
Lastly, insurance coverage is out there as either an indemnity (fee-for-service) plan or managed care plan (HMO, PPO, or POS). Indemnity plans are the oldest, also due to the most expensive kind of insurance. As a result of their high costs, indemnity plans have disappeared from the landscape and are replaced by managed health care plans.
Managed insurance plans are available in various forms: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), or Point of Service (POS) plans.
The struggle to provide employees with affordable insurance coverage is an ongoing process for several employers in today’s insurance market. A part of the tactic is education, from the standpoint of both the worker and employer. It is essential to understand that retaining affordable and quality insurance is critical to every side of the market – employer and employee. Indeed, when done correctly, this may be a win-win situation for all concerned.