Employee Health Benefit Questions & Answers

Employees sign up for health benefits through their employers. As employees sort through the variety of health care options offered, they struggle to understand the difference. These employees need answers to their questions in order to choose the right health care benefit for them.

Are Health Benefits Taxable?

• Employees who participate in employer-sponsored health benefit plans reap many benefits. They receive the insurance benefit while only paying a portion of the premium. The employer pays the remaining cost. The employee enjoys easy access to the plan, simply enrolling during the company's open enrollment period. The employee also enjoys the tax benefits provided by purchasing health insurance through his employer. The company deducts the employee portion of the premium from his taxable income.

Is Pregnancy a Preexisting Condition?

• Individuals joining an employee health benefit program may wonder about pre-existing conditions and whether or not the insurance will pay for certain conditions. Insurance companies can look at the past six months of an individual's medical records to determine if the insured suffers from a preexisting condition. If the individual does suffer from a preexisting condition, the insurance may deny coverage for that condition for 12 months. Under HIPAA laws, pregnancy is not a preexisting condition.

What Type of Health Insurance Coverage Qualifies the Employee to Open a Health Savings Account?

• In order to open a health savings account, an employee must enroll in a high-deductible health insurance plan. A high-deductible health plan requires the insured to reach a high amount of medical expenses paid out of pocket. The health savings account allows the employee to contribute money tax free into the account. The money remains tax free as long as the employee keeps the money in the account or uses the funds for medical expenses.

What is the Difference Between a Health Savings Account and a Flexible Spending Account?

• Both health savings accounts and flexible spending accounts allow the employee to put money aside for paying medical expense. Employees must use the funds invested in flexible spending accounts by the end of the year or they will lose the remaining dollars. Health savings accounts belong to the employee whether they use the money during the year or not.

What Happens to My Health Benefits if I Leave My Job?

• Employees who lose health benefits as a result of employment changes have the right to continue coverage through the Consolidated Omnibus Budget Reconciliation Act, or COBRA. This provides former employees access to the same benefits they received while employed. Individuals using COBRA benefits may be required to pay the entire cost of the premium.