health insurance and employment

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Economics

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Feb 20, 2024

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docx

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The practice of providing insurance by employers This type of insurance plan is selected and purchased by the employer for the employees. The selected insurance plan is offered to eligible employees and those dependent on them. The premiums costs are shared between the employer and the employee. The responsibility of choosing a plan and the administrative work is done by the employer. The employee pays premiums before tax deductions so the taxes on employee’s incomes will be lower. The premiums paid by the employer are not taxed by the federal government. By federal law employers with 50 or more employees must cover 60% or more of the premiums for their employees. Employers usually pay half or more of the insurance premiums. Employers could also get tax credit if they offer health insurance to their employees. “ Money that an employer spends on their employees’ health insurance premiums is not considered wages and is exempt from federal income tax and payroll taxes.” (How are contributions to health insurance premiums taxed? Section) https://gusto.com/resources/articles/benefits/health-insurance/employer-contribution-health- insurance The overall cost for employee is lower for the consumer because the coverage is spread across employees. The employee share of the premiums are deducted from the pay check before tax. However, with employer insurance one cannot pick from the variety of health plans. Health reimbursement rearrangements (HRSA), small health group insurance and salary bonuses are examples of employer-sponsored plans. Employers can also participate in HMOs, PPOs and (high deductible health plans (HDHP). Although Employer provided insurance is cheaper than marketplace insurance it is expensive for those who are eligible for Medicare or Medicaid. For employers, providing health insurance to their employees helps take care of employee health in turn leading to higher quality work for the employer. Employees are not eligible for employer sponsored insurance till they are on probation. They must be hired to be eligible. Even for hired employees the coverage could depend on the number of hours worked and the wages. The Obamacare “mandate requires employers with 50 or more full-time (or full-time equivalent) employees to provide coverage that is affordable, provides minimum essential coverage, and meets minimum value requirements for 95% of their full-time employees.” https://www.adp.com/spark/articles/2023/02/how-well-do-you-understand-the-aca- employer-mandate.aspx#:~:text=The%20employer%20mandate%20requires %20employers,of%20their%20full%2Dtime%20employees . Also under ACA continuous coverage is not required for the new employer-sponsored insurance to cover pre-existing conditions. If the employee is eligible the waiting period for regular coverage as well as pre-existing conditions cannot exceed 90 days. Children under 26 can remain under their parents’ employer-sponsored insurance. Pros of employer-based insurance .

The cost of the premium is subsidized or shared. The premiums are not subject to tax. Pre-existing conditions are covered. The employer purchases the plan so this saves the employee time and effort in selecting a plan. Many employers provide comprehensive and affordable care to their employees. Cons of employer-based insurance. There is a lack of flexibility in choosing your provider or plan. Supplemental health insurance may not be covered under this plan. You could have a gap in health insurance coverage if you switch jobs or are unemployed between jobs. Benefits to employers are as follows. Their costs are reduced for workers’ compensations, employee absenteeism and turnover are reduced, and it is easier to retain and recruit good workers. In addition, worker compensation claims are reduced. Families of employees get higher access to medical care and therefore the health of the general population is improved. Taxpayers will be less burdened with providing for the uninsured. Preventative health care costs are also covered by employer-based insurances. The plan is automatically renewed if the employee remains employed with the employer. However, the plan may not align with the employees’ needs. Employers give their own needs higher priority while they select the plans for their employees. It causes a lack of job mobility for employees due to good health coverage. The downside for the employer is that it could be expensive for the employer to provide comprehensive coverage and even more expensive with additional features. Usually, the coverage is for full-time employees, but every employer varies. Some may offer full coverage to part-time employees or offer insurance with no coverage for families. There is lack of equality because those with higher pay get higher health benefits and those with lower pay get less. In the long run employees with good coverage may also become so dependent on their employer for health insurance that employees may not be able to select the best plan for themselves if their coverage via the employer ends. Group coverage has increased in prices on an average in the last years and so have deductible and premiums. So many large employers feel that it may become difficult to sustain employer-based insurance.

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