What Is Employer-Sponsored Health Coverage?
Employer-sponsored health coverage is a type of group health coverage made available to employees by their employer. And while employers are not required to provide health benefits, the Patient Protection and Affordable Care Act (PPACA) does impose penalties in some cases on larger employers (50 or more workers) that elect not to provide coverage for their employees, or that provide insurance that is unaffordable. Although the premiums may be subsidized or even paid entirely by the employer, this is not always the case. Sometimes, the employer simply buys the policy, and covered employees are responsible for the entire cost.
Employers may offer group coverage to all employees, or they may designate that only certain categories of employees are eligible. For example, an employer may offer group coverage only to employees who have completed at least one year of service or who have attained a certain position level. However, anyone who meets these criteria must be eligible for coverage immediately with no further prerequisites.
What Are The Advantages of Employer-Sponsored Health Coverage?
Employer Often Pays All or Part of the Premium
In many cases, your employer will pick up some or all of the group premium. Thus, employer-sponsored health coverage is generally your most affordable option, if it is available. However, in some cases, the employer simply purchases a group policy, and the covered employees are responsible for the entire premium. Even in this situation, employer-sponsored coverage will typically be less expensive than individual insurance, since it is a group policy.
Individual Health Is Not Evaluated In Determining Insurability
Because employer-sponsored health coverage is a type of group coverage, the coverage provider agrees to cover all eligible employees, regardless of current physical condition or health history. The only condition is that employees must apply for coverage within the specified eligibility period. Clearly this is advantageous to those with chronic health conditions who might be considered uninsurable if applying for individual insurance.
Employer May Provide Several Coverage Options
Many employers offer several different employer-sponsored health coverage plans from which you can choose. Thus, you may be able to choose between an HMO and a traditional insurance plan, for example, or you may be able to decide between several different benefit levels and premium costs. In 2014, the PPACA provides that certain group plans must offer, at a minimum, an essential health benefits package as defined by the Secretary of Health and Human Services.
What Are The Disadvantages of Employer-Sponsored Health Coverage?
Less Freedom to Customize Policy
When you get employer-sponsored health coverage, the provisions of the policy have already been negotiated between the coverage provider and the employer, who is the policyowner. You don't have the freedom to have certain provisions included or excluded, and your deductible amount and co-payment percentages are determined in advance.
How Do You Get Employer-Sponsored Health Coverage?
Simply Sign Up For Coverage during the Specified Eligibility Period
As with any group health insurance, you must apply for coverage within the specified eligibility period to receive coverage without consideration of your current physical condition or health history. Find out from your employer how long you have to sign up for coverage, and take the appropriate steps prior to this deadline. Failure to do so could mean an extensive series of health-related questions and examinations, and the insurer might choose not to cover you if you are discovered to be a poor risk. In the case of employer-sponsored group coverage, late enrollees may still be able to obtain coverage, but the preexisting condition period can be extended.
Do You Get a Copy of The Policy?
Only the owner of the master policy (in this case the employer) receives a copy of the actual policy. You will, however, receive a certificate that proves that you are covered under your employer's health plan. The certificate contains such information as the covered individual's name, other beneficiaries' names (if any), and the amount and type of coverage.
What Does It Mean If Your Employer Offers Health Coverage Through a "Self-Insured Fund?"
Self-insurance means that, instead of purchasing group health insurance from a coverage provider, your employer periodically deposits money in a self-insured fund. When covered employees and their dependents require medical care, reimbursement comes from this fund. Because there are no premiums or commissions to pay, this can be a money-saving option for some employers. However, it is not a feasible option for most, since the pool of employees must be quite large to accurately predict medical costs. Also, the employer must have adequate financial resources to absorb the cost of unexpectedly high claims.
Smaller employers may be able to reduce coverage costs by forming a multiple employer welfare association (MEWA). In this type of arrangement, numerous small employers pay into a central pool to provide their employees with health coverage. The MEWA buys a single policy to cover all eligible employees. By sharing bills and risk, small companies can afford to provide better benefits for their employees. Similar in nature is the multiple employer trust, which is typically formed by a group of small employers within a certain industry.
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