What Is an Employer-Sponsored Health Plan?

When working for an employer, one of the benefits that you may receive is access to a group health insurance plan. Employer-sponsored health insurance plans are one of the most common ways that people in the United States receive health coverage. These plans provide a number of benefits to employees and employers.

Definition

• An employer-sponsored health insurance plan is primarily paid for by the employer. The employee may also share in some of the costs of the premiums. In some cases, the employer will pay for the premium of only the employee and then pay for a part of the employee's family premiums. Other plans completely pay for the premiums of the employee's entire family.

Access

• According to the Bureau of Labor Statistics, the majority of workers in the private sector have access to a group insurance plan. A 2006 study determined that nearly 71 percent of people in the private work force had access to a group health insurance plan. Over half of all workers in the work force are covered by one of these plans. As an alternative, some employees opt to pay for their own health insurance privately.

Costs

• With private health insurance plan, you may be able to pay less than what you would pay for a private plan. Since the employer typically picks up part of the insurance premiums, you may only have to pay a partial premium for you and your family. The deductible on these types of plans tends to be lower and the co-pay and co-insurance percentages are smaller as well. In some cases, employers also offer flexible spending accounts, which allow you the opportunity to pay for out-of-pocket medical expenses with tax-advantaged money.

Acceptance

• One of the major benefits of being involved with group health insurance is that it is easier to get accepted than if you apply for private insurance. With a group health insurance plan, you can automatically be accepted for coverage even if you have serious medical problems. With the private market, this is not always the case. You may have to get a physical exam or answer health-related questions before you can be approved.