Health insurance is one of the most important benefits that an employer can offer to its employees. It provides financial protection against the high cost of medical expenses, which can be a significant burden on individuals and families. Many people rely on their employer-sponsored health insurance as their primary source of coverage, making it a crucial factor in their overall compensation package. Additionally, offering health insurance as an employee benefit can help attract and retain top talent, as well as improve employee satisfaction and productivity. As such, it is essential for employers to carefully consider their health insurance offerings and ensure that they are providing their employees with the best possible coverage.
Mandatory Employee Benefits
The United States does not have a federal law that mandates specific employee benefits that employers must provide to their employees. However, there are some mandatory employee benefits that are required by federal and state laws. Here are some of the most common mandatory employee benefits in the USA:
- Social Security: Employers and employees are required to contribute a percentage of their income to the Social Security fund, which provides retirement, disability, and survivor benefits to eligible individuals
- Medicare and Medicaid: Employers and employees also contribute to the Medicare program, which provides health insurance coverage to eligible individuals who are 65 or older or have certain disabilities. Medicaid is a joint federal-state program that provides healthcare coverage to low-income individuals and families.
- Workers’ Compensation: Employers are required to provide workers’ compensation coverage to their employees, which provides benefits to employees who are injured or become ill as a result of their job.
- Unemployment Insurance: Employers are required to pay into the unemployment insurance system, which provides financial assistance to employees who lose their jobs through no fault of their own.
- Family and Medical Leave: The Family and Medical Leave Act (FMLA) requires employers with 50 or more employees to provide eligible employees with up to 12 weeks of unpaid leave per year for certain family or medical reasons, such as the birth or adoption of a child, caring for a family member with a serious health condition, or the employee’s own serious health condition.
- Minimum Wage: Employers must pay their employees at least the federal minimum wage, which is currently $7.25 per hour. However, many states and local jurisdictions have their own minimum wage laws that require employers to pay a higher minimum wage.
- Overtime Pay: Employers must pay their non-exempt employees overtime pay for any hours worked over 40 hours per week, at a rate of at least 1.5 times their regular rate of pay.
It’s important for employers to understand and comply with the mandatory employee benefits required by law to avoid legal consequences and to provide their employees with a safe and fair workplace.
Types of Health Insurance offered by Employers
While health insurance is not mandatory for all employers in the US, it is still a common and important employee benefit that many employers offer to attract and retain talent. Employers offer several different types of health insurance plans to their employees. Each plan has its own set of benefits, costs, and restrictions, so it’s important for employees to carefully review and compare their options before choosing a plan. Here are some of the most common types of health insurance plans offered by employers:
Health Maintenance Organization (HMO) Plans
HMO plans require employees to choose a primary care physician who coordinates their healthcare and refers them to specialists within the HMO network. Employees typically pay a fixed co-payment for medical services and must obtain pre-authorization for certain treatments.
Preferred Provider Organization (PPO) Plans
PPO plans allow employees to see any healthcare provider they choose, but they receive lower out-of-pocket costs when they use providers within the PPO network. Employees may also have to pay deductibles and co-insurance for certain medical services.
Point of Service (POS) Plans
POS plans are a combination of HMO and PPO plans. Employees choose a primary care physician within the POS network, but they have the option to see out-of-network providers for higher out-of-pocket costs.
High-Deductible Health Plans (HDHP)
HDHP plans have higher deductibles and out-of-pocket costs than traditional plans, but they offer lower monthly premiums. Employees can pair HDHP plans with Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs) to save money on healthcare expenses.
Indemnity Plans
Indemnity plans allow employees to see any healthcare provider they choose and pay for services as they are rendered. Employees typically pay a percentage of the cost of medical services, and the plan may have annual limits on coverage.
Employees typically share in the cost of health insurance premiums with their employer, with the employer typically covering a portion of the cost. Deductibles, co-pays, and other out-of-pocket costs may also be shared by the employee and employer.
Under the Affordable Care Act (ACA), employers with 50 or more full-time employees are required to offer health insurance coverage to their employees or pay a penalty. Additionally, the ACA requires health insurance plans to provide certain essential benefits, such as preventive care and coverage for pre-existing conditions.
Employees should carefully review the benefits and costs of each plan to determine which one is the best fit for their healthcare needs and budget. Employers may also offer additional benefits, such as dental and vision coverage, as part of their health insurance plans.
Essential Benefits Required by Law: The Affordable Care Act (ACA)
The Affordable Care Act (ACA), also known as Obamacare, requires that all health insurance plans sold on the individual and small group markets must provide essential health benefits (EHBs). These benefits are required by law and must be included in all individual and small-group health insurance plans, including those sold through the Health Insurance Marketplace.
The ten essential health benefits required by the ACA are:
- Ambulatory patient services: This includes outpatient care, such as doctor visits, lab tests, and X-rays.
- Emergency services: This covers emergency care, such as ambulance services and emergency room visits.
- Hospitalization: This includes inpatient care, such as surgery and overnight hospital stays.
- Maternity and newborn care: This includes prenatal care, labor and delivery, and postnatal care for both the mother and the baby.
- Mental health and substance use disorder services: This includes behavioral health treatment, such as counseling and therapy, and treatment for substance abuse disorders.
- Prescription drugs: This includes coverage for prescription medications, both generic and brand-name.
- Rehabilitative and habilitative services and devices: This includes services and devices to help people with disabilities, such as physical therapy and assistive technology.
- Laboratory services: This includes diagnostic testing, such as blood tests and biopsies.
- Preventive and wellness services and chronic disease management: This includes services to help prevent illness, such as immunizations and cancer screenings, as well as care for chronic conditions, such as diabetes and asthma.
- Pediatric services, including oral and vision care: This includes coverage for pediatric dental and vision care.
By requiring health insurance plans to cover these essential benefits, the ACA aims to make sure that all Americans have access to quality healthcare that meets their needs. It also helps to prevent insurers from offering plans that provide minimal coverage, leaving consumers vulnerable to high out-of-pocket costs or inadequate healthcare.
The Importance of Health Insurance for Employees
Health insurance is an essential employee benefit that provides workers with access to medical care and financial protection against the high costs of healthcare. Without health insurance, employees may delay or avoid seeking medical treatment due to concerns about affordability, leading to a deterioration of their health and potentially more severe health conditions down the line. This can lead to increased absenteeism, decreased productivity, and higher healthcare costs in the long run. Additionally, without health insurance, employees may be forced to pay for medical expenses out-of-pocket, which can be financially devastating, especially in cases of serious illness or injury.
Providing health insurance to employees, not only benefits the employees but also the employer. Health insurance is often considered a critical factor in attracting and retaining talented employees, particularly in a competitive job market. It can also improve employee morale, job satisfaction, and overall well-being, leading to increased productivity, lower absenteeism rates, and decreased healthcare costs for the employer. Furthermore, providing health insurance can help employers comply with the Affordable Care Act (ACA) and avoid costly penalties for failing to provide adequate coverage to their employees. In summary, health insurance is an essential employee benefit that can benefit both employees and employers alike, making it a crucial component of any comprehensive employee benefits package.
If you want to know more about your health insurance options in Sparta Township, please check our blog for more.
Thomas M. Brzezinski is one of the founding partners of WMAG William & Michael Advisor Group LLC and Jersey Insurance Solutions. He has been involved in the insurance industry for over ten years and specializes in developing client relationships that last a lifetime.
