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Pros & Cons of Employer-Based Health Insurance

An employer who offers health insurance benefits to his employees is much sought after in the United States. Employer-based group rates provide health insurance to those who may not be able to afford it otherwise. A closer look at these group plans also reveals a few negatives to go along with the positives.

  1. Lower Premiums

    • Employers are able to secure group health insurance premiums for employee health plans, which greatly reduces the premium each employee pays at the end of the month. Some employers even choose to pay all or a portion of the monthly premium for each employee who is eligible for health care benefits. This can potentially mean free health care for the employee outside of paying the normal policy deductibles and co-pays for medical procedures and doctors' visits.

    Less Adverse Selection

    • In employer-based health insurance groups, adverse selection is less likely to occur because of the size of the group pool. This means that if you are a high-risk insurance candidate, like someone with a chronic pre-existing health condition, you are more likely to be insured with your employer's health insurance plan than you would be on your own. Employer-based health care is the holy grail for some Americans with pre-existing conditions who would otherwise not be able to find coverage or may be forced to pay prohibitively high premiums for private high-risk health insurance.

    Lack of Policy Choices

    • In the majority of employer-based health insurance groups, the employer makes all the decisions regarding the choices available to employees in creating an individual health policy. This means that if the group insurance plan does not include vision care or dental options, employees may not be able to add them to a policy. Policies may also restrict which physicians employees may see, which could mean a change of the family doctor

    Individual Insurance May Be Better

    • According to the Health Affairs website, for some employees, a private health insurance policy may actually be a better option over an employer-based group plan. This is typically true for younger employees who have less need of coverage and generally secure the lowest rates available in private insurance. This poses a problem for group health insurance plans since without those young, healthy employees to average out the premiums, costs may go up.

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