Although many employees may be more familiar with traditional, group health insurance, there are many benefits to individual health insurance that makes employees happier. This article provides the top three reasons why employees are happier with individual health insurance rather than group health insurance, and why businesses are reimbursing their employees individual health insurance with a premium reimbursement plan.
Top 3 Reasons Why Employees are Happier with Individual Health Insurance
1. Employee Choice
Individual health insurance offers more choice and control to employees by allowing them to choose a plan that fits their own needs, including coverage level and network. Employees can choose their own plans to work with their budget. These plans can be customized to individual circumstances and age.
For example, if a young employee is relatively healthy and on a tight budget, a plan with a lower premium and higher deductible may be the right choice. On the other hand, for employees with more healthcare needs, a plan with a higher premium and lower deductible may be the better plan.
2. Lower Costs
Individual health insurance costs up to 60 percent less than group health insurance coverage. Additionally, employees may qualify for premium tax credits, depending upon their income level, household size, and eligibility for other government subsidized programs.
As the Marketplace enters the second year of operation, more major health insurance carriers are entering the Marketplace or expanding their presence in the Marketplace. For employees, this means more individual health plans to choose from and more competition. This increased competition among insurance carriers will help to keep rates down in 2015.
3. Portability
Since individual health insurance is selected and purchased by the employee, just like car insurance, employees get keep their health insurance if they leave a business. As a result, there is no more need for expensive, short-term insurance options.
Top 3 Reasons Employees Aren’t Happier with Group Health Insurance
1. No Consumerism
Picking a one-size-fits-all plan for employees and their families can be a conundrum. Since each employee’s family has different financial and healthcare needs, some employees may be paying too much for coverage they don’t use. On the other hand, some employees’ coverage may not be comprehensive enough.
2. Unsustainable Costs
The preliminary results of the Mercer National Survey of Employer-Sponsored Health Insurance found that the rates will increase by 3.9 percent in 2015-- and that’s if businesses make significant changes to their current plans. Additionally, the average annual family premium in 2014 rose to $16,834. This is an increase of 26 percent in the last five years and 69 percent in the last ten years. These cost increases are not sustainable for businesses or employees.
Chart: Kaiser Family Foundation
3. Contingent on Employment
Since group health insurance policies are held only by a company’s employees, if an employee quits, their family loses coverage. Employees do have the option to elect into COBRA, although the premiums are often too expensive. This is because the employees are typically responsible for the full cost of the insurance premium, plus the business’ share of the premium, and a two percent administration fee.
Pairing a Premium Reimbursement Plan with Individual Health Insurance for Optimal Employee Benefits
Due to all of the advantages of individual health insurance, many businesses are reimbursing their employees’ individual health insurance policies by using a premium reimbursement plan.
With this type of health benefit, the business offers employees a health insurance allowance that employees may spend on purchasing individual health insurance. This type of approach is ideal for employees who still want to offer benefits for recruiting and retention purposes.
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