Employer-funded individual health insurance solutions are being adopted by firms nationwide, as an alternative to traditional employer health benefits. This consumer-friendly solution is being explored by employers of all sizes, in all regions, and across all industries. A new Zane Benefits study, however, identifies insightful trends in adoption and usage today. This article highlights key trends from the new study.
Note - To download the full study, “The Employer-Funded Individual Health Insurance Annual Report 2016,” click here.
Employer-Funded Individual Health Insurance - User Profile
According to the report, the data is intended to provide a detailed, nationwide profile of how employers and employees are using employer-funded individual health insurance (a type of healthcare reimbursement plan) today. The findings are based on a sample of 2,200 employers and 10,500 participants using Zane Benefits’ software during the 2015 calendar year.
Here are highlights from the report on the type of companies adopting employer-funded individual health insurance:
Employers are predominantly small employers - those with one to 49 employees. The average number of eligible employees enrolled is nine (9).
The most prominent industries represented in the study are healthcare (16 percent of employers), manufacturing (13 percent), non-profit organizations (11 percent), consulting firms (8 percent), and construction (8 percent).
Employers are spread out across the nation with 11 percent from the East, 21 percent from the Midwest, 38 percent from the South, and 30 percent from the West.
Why Companies are Adopting Employer-Funded Individual Health Insurance
Employer-funded individual health Insurance is being rapidly adopted by smaller employers because of these five key reason:
Cost Savings - On average, individual health insurance costs less. According to the study, employers using Zane Benefits’ software realized cost savings of 57 percent, on average, compared to average group health insurance costs.
Predictability and Control - Employers set the maximum contribution (reimbursement) amount, which provides predictability and control. Unlike group traditional health insurance policies, there are no annual rate hikes and no minimum employer contribution amounts.
Tax Benefits - By using a tax-free reimbursement plan, employers and employees receive tax advantages.
Employee Choice - With this type of health benefit, employees select and purchase the individual policy of their choice. Employees may select any policy, from any carrier. Eligible employees may access the federal subsidies for additional savings.
No Employer Mandate - Under the Affordable Care Act, smaller employers are not mandated to offer traditional health insurance to employees. As such, smaller employers may offer individual health insurance reimbursement without having to factor in Employer Shared Responsibility Fees, which do not apply to smaller employers.
Employers all over the nation are implementing employer-funded individual health insurance solutions as an alternative to traditional group health insurance benefits. What type of companies are adopting this benefit model? According to the study, it is primarily small and micro employers across many regions and industries.
What questions do you have about who is adopting employer-funded individual health insurance? Download the full report here, or leave a question below.