What are the Advantages of Employer Sponsored Healthcare Coverage vs Defined Contribution?

What are the Advantages of Employer Sponsored Healthcare Coverage vs Defined Contribution?


FROM THE EMPLOYER PERSPECTIVE

According to a survey by Glassdoor, employees said health insurance is, by far, the most important benefit they receive from their employer. That’s why employers often offer health insurance as an initial company benefit.

A group healthcare plan is defined as an employee welfare benefit plan established or maintained by an employer. Group plan networks are often larger than individual networks. That means on an individual plan, you might not have access to the same doctors and hospitals that you would on a group plan. Doctors and hospitals that don’t accept individual plans often charge more for their services and are often more sought out by patients. The network differences vary by state, but purchasing a group plan can increase your access to more, and often better, doctors and hospitals. The subsidized or shared premium is paid on a pre-tax basis, remains with you if you change jobs, and pre-existing conditions are covered.

Why do businesses cover or contribute to their employees through group plans, even if they’re not legally required? Perhaps it’s good for them too. Here are some possible reasons they offer health insurance.

  • According to the IRS, if an employer pays the cost of an accident or health insurance plan for his/her employee, including an employee’s spouse and dependents, the employer’s payments are not wages and are not subject to Social Security, Medicare, and FUTA taxes, or federal income tax withholding.  
  • Recruiting tool: It’s pretty clear that if a potential employee is deciding between two jobs, a sought-after employee often has the advantage in negotiating job perks and benefits. Benefits like a superior health insurance plan can tip the balance in the potential employee favor.
  • It can reduce absenteeism: Because a healthy employee is often more productive, and less prone to injury, he or she is also less likely to miss work days.
  • Employee satisfaction: Research show employees feel more favorable about their jobs and employers when health benefits are provided.
  • Retention: Employers understand employees are more likely to stay with a company that offers valuable insurance benefits, and that the employee would be far costly to replace.
  • An employer wants their employees to focus on being their best productive and successful selves at work. Worrying about health insurance could drain energy and time.

FROM THE EMPLOYEE PERSPECTIVE

Having a sizable portion of medical costs paid through an employer’s benefit package can be quite a comfort. It’s no exaggeration to say that an individual without health insurance can be literally just one major injury or illness away from financial ruin.

Employer-sponsored healthcare insurance is a health policy selected and purchased by an employer and offered to eligible employees and their dependents. With this defined benefit healthcare, the employer sets the specific health benefit. The employer typically shares the cost of the premium, and, as a result, the employer chooses the plan options.

Defined contribution healthcare plans are an alternative to traditional employer-sponsored health benefits, allowing companies to reimburse employees for individual healthcare insurance. Each employee can use this contribution to purchase benefits through an online marketplace. The marketplace itself is not an insurer, but rather provides a menu of plan options offered by national carriers.

With defined contribution healthcare, the employer doesn’t dictate the exact health benefit and enables the employee to be more involved in their health care choice.

So, how does an employee, not receiving a healthcare benefit and as an individual, buy group insurance on their own? One way is to access the healthcare marketplace via Candor USA. By answering a few questions, the employee, as an individual, might be able to join a group. As a member of a group, an individual’s purchasing power is combined with other individuals to obtain better plan options, at better prices, than are typically available. The simplified enrollment process completes the search for appropriate coverage by comparing plans from the nation’s leading carriers and making sense of a plan before you enroll. In addition, with the Candor marketplace, Prosper Benefits is bundled with all plans and includes programs like TeleHealth™ and Medical Bill Saver™. These benefits should be considered savings when adding up the true cost of healthcare coverage.

Deciding whether to let your employer control your healthcare insurance, opt for defined contribution, purchase coverage as an individual, or join a group can be confusing. There can be significant differences in flexibility, benefit options and costs, but there is help out there. Take a look at Candorinsurance.com, the healthcare companion of all Americans.

Ultimately, choosing the best avenue for you will depend on your unique circumstances, what your employer is able to offer, and whether you would prefer to be in control of your own healthcare.





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