Having health insurance is important even when in good health. Why? It’s hard to know when an accident is going to happen. When it comes to small business owners, health insurance is a key tool used to recruit, retain, and keep their employees in good health. As such, it’s important for both employees and small business owners to understand why health insurance is important. This FAQ provides a more detailed look at the benefits of having health insurance.
What is Health Insurance?
Health insurance is a type of coverage that covers the cost of an insured individual’s medical expenses. There are various types of health insurance - here are two common ones:
Group: Group health insurance is insurance provided by employers and offered to employees and dependents of employees. The premium cost is typically split between the employer and employee, with the employee typically paying all or most of the cost to add their dependents to the employer plan.
Individual: An individual or family health insurance policy is a policy purchased from an insurance company covering you and selected family members. It works just like car insurance. With individual health insurance, the risk is spread over a large group of people—hundreds of thousands, even millions, depending on the plan and insurance company.
Expect the Unexpected
Health insurance is the important financial protection that individuals need in the case of an accident or sickness. Without health insurance, an individual is exposed to large costs and even bankruptcy. When an individual is covered, their plan protects them from the following high medical expenses:
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Coverage after the deductible is met
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No yearly or lifetime limits
Preventive Care
Many health insurance plans allow individuals to get preventive care. This means that screenings, immunizations, etc. are covered to prevent covered individuals from sicknesses. Without health insurance, many individuals miss out on these services that can identify disease early and support good health.
Additionally, many services for covered individuals are covered at no cost and can include the following:
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Many vaccines and immunizations
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Blood pressure and cholesterol screenings
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Colorectal cancer screening
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Mammograms
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Well-woman care
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Contraception
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Many screenings for children, including vision and hearing
Avoid the Fee
To finish answering the question of why health insurance is important is that, without minimum essential coverage, individuals must pay a fee. The fee is either a percentage of your household income or a flat fee - whichever is higher. In 2014, if you didn’t have coverage, you’ll pay the higher of these two amounts as you file your 2014 federal tax return (keep in mind that these numbers go up in 2015):
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1% of your yearly household income. (Only the amount of income above the tax filing threshold, about $10,000 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan.
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$95 per person for the year ($47.50 per child under 18). The maximum penalty per family using this method is $285.
Why is health insurance important to you and your small business? Join our discussion and comment below.
