What Are Insurance Alternatives for the Employee?

Health insurance may be expensive, but it is not nearly as expensive as paying for an injury or illness without coverage. If your employer is eliminating group health coverage, or if you are unhappy with the choices offered to you, you may wonder if you have any alternatives. While your choices are limited, there are some other avenues to explore.

Individual Health Insurance

• If you don't have access to health insurance through your workplace, apply for an individual policy from one of the many insurers that offer them. Individual plans tend to offer you more choice and flexibility than group health plans from work, because you can choose the plan, benefits and pricing that suit your situation. However, individual plans require medical underwriting, meaning you will pay more or lose coverage if you aren't in good general health, and premiums tend to be higher than group plans for equivalent coverage.

Spousal Insurance

• If you cannot get insurance through your own job, maybe you can attach yourself to your spouse's benefits. This only works if you have an eligible spouse, of course, but it can be beneficial to you if you qualify. Your spouse's contribution to his insurance plan will increase if it also covers you, and probably by more than double because employers tend to contribute less toward dependents than toward employees, but it is still better than being uninsured.

Cafeteria-Style Insurance

• You may also benefit from a cafeteria-style insurance plan. Traditional group health insurance is one-size-fits-all, and you must either buy into the plan or not, with no other choices. Cafeteria-style insurance puts the power of choice into the employees' hands, allowing them to choose the benefits and pricing that works for them, without the medical underwriting necessary for individual plans. These plans may include flexible spending accounts in addition to insurance plans. Employers must sponsor these plans, however, so you won't have this option unless your human resource department agrees to it.

Spending Accounts

• Health savings accounts and flexible spending accounts offer an alternative to insurance. Both are financial accounts into which you can put pretax dollars you then use for medical purposes, thus giving you a tax benefit on money you spend on health-related matters. Use both types of account in conjunction with insurance plans, so the out-of-pocket costs are tax-free. Unused HSA money can remain in the account from year to year, whereas FSA money expires at year's end if not used.