Employer based Health Insurance: know the Pros and Cons

As the ACA is forcing employers to provide healthcare for their employees and penalizing those that aren’t, many are forced to question the merits and demerits of the new provisions. While some employers are moaning about the prospect of having no choice in the matter, there are many that are welcoming the ACA with open arms. We take a quick look at some of the key pros and cons of employer based health insurance.

Pros:

Lower premiums

For employee health plans, group health insurance premiums secured by employers are able to reduce the cost of coverage for individual employees each month. For each employee that is eligible for health care benefits, a portion of the monthly premium or the entire sum may be payable by the employees which could in theory provide employees with free health care. Even though they would still have to pay for doctors’ visits, co-pay for medical procedures and pay the normal policy deductibles, group health plans would be able to reduce premium burdens on eligible employees.

Less scope for adverse selection

One of the major concerns for Americans today is that those with pre-existing conditions find it very hard to find coverage and whatever coverage they do find, is usually way too high for them. However, if the size of the group pool is large enough, employer-based health coverage may be able to make getting coverage easier and more affordable for employees while reducing the burden of providing healthcare on employers each year as well.

Cons:

Lack of choices in policies

In a group, employer-based plan, the employer gets to make all the decision regarding which options cover a majority of the employees, which doctors the employees may see etc. For individuals, this means they can no longer see the family physician that has been consulting them for generations or even having to pay out of pocket for dental or vision costs if they are not covered in the group plan.

Employees may prefer individual insurance

While employer-based group plans remain tempting, some employees may find private health insurance policies more suited to their needs. Private insurance can provide the lowest rates available to those workers who have less need of coverage like young employees and those who are generally more fitness oriented. A group plan premium may appear unfair to these employees that may be on the lower end of the salary scale within a group.