Advantages & Disadvantages of Employer Healthcare Insurance

Most people in the United States get their health insurance coverage through their employers. This system presents both benefits and challenges to workers. It is important to understand the pros and cons of getting your insurance where you work. For instance, buying your health care plan through your employer can lower your costs, but it can limit your choices as well.

Lower Costs

• Employers are able to negotiate lower group rates with insurance companies, and that reduces the premiums for all employees who participate in the plan. If you shop on your own for health insurance, you can not enjoy this bargaining power. In addition to the lower group rates, most employers pick up at least part of the cost of coverage for their employees. If you buy a plan on your own you will have to pay the entire cost.

Easier Access

• Getting coverage through your employer provides you with one stop shopping and makes it easier to find the plan that best suits your needs. If you shop on the individual market, you first need to find a health insurance broker, who then compares the costs and benefits of many different plans and makes a recommendation based on your stated needs. The process of identifying the best health care plans and choosing the right one can be both complicated and time-consuming. Simply choosing a plan from your employer is much simpler and faster.

Help When You Need It

• Another advantage of getting health insurance through your employer is that you have help available when you need it. If you experience a problem getting a claim paid, or if you have questions about your coverage, your human resources representative can act on your behalf. Your local human resources representative can contact the insurance company and get things worked out quickly, often much more quickly than you can on your own.

Limited Choices

• Perhaps the biggest disadvantage of employer-based health insurance is that you have a limited number of choices. Depending on the employer, you might have access to only a single plan. Even if you have access to more than one plan, your choices are likely to be limited to just a handful of similar programs. If you shop instead on the individual market, you can have access to a wide range of plans, from comprehensive benefit programs with very low deductibles to high deductible health plans with lower premiums and access to health savings accounts. If you are dissatisfied with the choices offered by your employer, you can shop on your own, but you will probably face higher costs for those plans.