What are the Benefits of Having Health Insurance Through Your Employer?

Employer-sponsored health insurance plans have traditionally been the most common form of health coverage in the United States. Even with rising trends of high-deductible plans and individual marketplaces, most working Americans still get their health insurance through their job.

There are several key advantages to getting health insurance through your employer:

Lower Premium Costs

One of the biggest benefits of employer health plans is that premium costs are significantly lower compared to individual market plans. Employers pay a large portion of employees’ monthly premiums, reducing the amount workers have to contribute out of their paychecks.

On average, employers cover over 80% of total premiums for employee-only coverage and around 70% of premiums for family coverage. This premium splitting substantially lowers costs for employees.

Pre-Tax Contributions

Another money-saving factor is that premium contributions are automatically deducted from paychecks before taxes. This reduces an employee’s overall taxable income for the year.

For example, if an employer plan has a total monthly premium of $500 and the employer pays $400 while the employee contributes $100, that $100 is deducted pre-tax which lowers the employee’s taxable pay.

Choice of Plans

While not unlimited, employer-sponsored plans do provide options to choose from in terms of carriers, networks, deductibles, copays, coinsurance, drug coverage tiers, out-of-pocket maximums, and included benefits. Companies select a menu of plan offerings each year during open enrollment that fit within their benefits budget.

No Underwriting

Group health plans do not deny coverage or exclude pre-existing conditions. No health history questions or underwriting is required to enroll. As long as an employee is eligible, they can join the plan without issue.

On the individual market, pre-existing conditions can still affect eligibility, premiums, and covered benefits if one does not maintain continuous “creditable coverage” from other insurance plans.

Spousal and Dependent Coverage

Many group health plans allow employees to enroll their spouse, domestic partner, and dependent children in the same plan with family-tiered premium rates. Individual plans must be purchased separately for each family member.

COBRA Benefits

If an employee leaves a job, they can continue on the employer’s health plan for 18-36 months under COBRA laws, which is very helpful if between jobs or transitioning to a new plan.

Overall, employer-sponsored health coverage offers workers affordable and convenient benefits that would be difficult and expensive to replicate through individual plans. This makes job-based health insurance highly desirable, especially for workers with families and pre-existing conditions.