When you hear the word “modern,” you likely think of progress that addresses problems or challenges of the past. That’s an apt description of modern individual health insurance, a concept that has blossomed into something far more beneficial than previously imagined — and, in many cases, much more feasible for small businesses than the traditional employer-provided health plans to which most people are accustomed.
History of Health Insurance
Long ago, the phrase “individual health insurance” evoked notions of employees being left to fend for themselves for medical coverage, without any support from their employers or other sources, such as the government.
The insurance model changed with the onset of nontaxable health benefits provided by employers. Soon employer-provided coverage became the norm.
There are many nuances to the history of health insurance in the U.S., but one fact is clearly arising: Modern individual health insurance plans are providing much of what people once expected from traditional group health plans.
There are some similarities between the two systems; for instance, both enable coverage for pre-existing medical conditions. However, the model in which medical coverage is selected by employees and then reimbursed by employers enables several boons unattainable within the traditional group health structure.
The Health Insurance Marketplace that arose from the Affordable Care Act enables individuals to choose from a variety of coverage options, rather than the one or two one-size-fits-all plans normally offered in employer-provided group health.
Choice in medical coverage is a welcomed reprieve for anyone who’s been exasperated by the inflexibility of a plan designed to meet the needs of the average person within an organization. Often you’re left paying for coverage you’ll never use; other times you don’t receive the coverage that your unique situation calls for.
It’s interesting to note that the influx of choices available through individual health insurance actually costs employees less, on average. In fact, individual health insurance costs up to 60 percent less than similar group health insurance, on average. In addition, some employees qualify for premium subsidies that can defray the cost of coverage quite a bit.
The savings are there for employers, too. Businesses that offer tax-deductible defined contributions to their team members who use individual health insurance conserve considerable staff resources. They also can foster valuable predictability by setting monthly healthcare allowances — keeping health insurance costs as predictable as possible.
Employees Can Take Coverage With Them
One of the most stressful parts of switching jobs is finding affordable insurance in the interim. With individual health insurance, the coverage that employees select for themselves stays with them even after they leave the company. While the defined contributions go away, the coverage does not. It’s a valuable stop-gap during that often tricky in-between period.
While many employees still find the perceived security of traditional employer-sponsored health insurance as a major boon, others are finding significant value in choosing more and paying less through individual health insurance with defined contributions from their employers.
If you have a question about the benefits of modern individual health insurance at your small business, please leave a comment below.