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.

4 Things You Need to Know About Employer Sponsored Life Insurance Benefits


Why is employer health insurance better?

Choosing group health insurance can save you money With group health insurance, you’ll generally see that there are cost-saving benefits such as: A larger risk pool for the plan. An employer contribution toward your premium (often 50%) Employer-based tax incentives.

What does insurance through employer mean?

Employer-sponsored coverage, also known as employer-sponsored insurance or employer-provided health insurance, is health insurance offered to you and your dependents through your job. Your employer may offer a choice of group health plans to eligible workers and cover part of the premium (monthly cost).

What is the main downside of employer provided health insurance?

Lack of control for employees‍ Group health insurance plans are controlled by employers. They choose the features, and the coverage and employees don’t get a say in the plan or scheme so selected. This lack of control could be a deterrent for employees.

How important are health insurance benefits to employees?

Providing health insurance is not only important in attracting top talent but also retaining it. The EBRI 2022 Workplace Wellness Survey reports that 73% of employees say health insurance is the most important factor in deciding whether to stay in their current job.

Leave a Comment