Does it Benefit the Company You Work for to Cover Your Health Insurance?

This is what companies see their costs doing regarding health insurance for employees

With all the hoo-ha going on these days regarding the government’s health care reforms, it’s easy for the little details to get lost in the shuffle, little things that pertain to the individual. However, they say that “God is in the details,” and this is often the case, since little things make big differences. One thing that isn’t so little is wondering about your individual health care insurance, and wondering what will happen to it when these reforms really kick in. Supposedly everyone will have access to health insurance. Many people have insurance already through their jobs, so it’s not so much of a worry for them, but the question does beg to be asked: does it benefit them to cover your health insurance?

Well, the answer is, as these kinds of answers to these kinds of questions are, mixed. Yes, and no.

Yes, it benefits them to offer insurance to their employees and to even pay for a portion of it, a process called subsidizing. Basically, by offering a group health insurance policy to their employees, the insurance company is able to offer lower rates to all than they’d be able to give them as individuals, because risks and costs are all spread out rather than being focused on one person. Because of these discounts the employer is able to pay some towards the cost of the premiums for the employees, as a benefit, because they are able to claim those payments as tax deductions and attribute them toward operating costs. Also, when the reforms begin to roll in in force, there will be government subsidies for companies to be able to offer more insurance benefits to their employees, which is also better for their bottom line.

And no, it doesn’t benefit them. No matter how noble their intentions, it’s practically impossible for them to keep up with the exponentially rising costs of health care and insurance costs, especially in the face of inflation and other economic factors. That is enough of a reason for employers to only offer the basic coverage possible, with a minimum of subsidizing (sometimes none), and only to those employees who they’re required to offer it to (full-time employees, those who have worked at the company for a certain period of time and longer, etc.). Benefits are expensive, even with tax credits and governments subsidies. This is one reason many companies oppose the new health care legislation, because they can see their bottom lines almost visibly shrinking, because they will be required to offer health insurance to basically every employee.

It’s not that corporate American doesn’t care, really; executives are people too, but far too often they’ve lost their perspective on the “little guy” and what life really costs for those without a golden parachute. They’ll do what they have to do to comply with the law, but there will be cut-backs in quality as businesses try to maintain their profit margin, or to even stay solvent in many cases. My guess is that as the health care reforms become more concrete employees will get their benefits, but they’ll be slashed to the bare bones of coverage, and they’ll find employer subsidies are practically non-existent for the coverage that they do have.