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Why do employers offer health insurance coverage to their employees?

A brief overview...
  • Employers are required by law to provide certain benefits as part of their compensation package
  • For employers, the cost of health insurance is far lower than the potential cost of lost productivity due to an extended, preventable illness
  • Your employer contributes a portion of the premium for your coverage

In today’s competitive marketplace, employers have learned that salary and vacation time aren’t the only thing that potential employees are evaluating.

The value of offering a wide-range of benefits to entice top talent to join a team and stay is cannot be compared to the cost to the employer.

From on-site gyms to employee discounts and wellness programs, the total compensation package offered can be the difference between a short-term employee and a long-term, dedicated staff member.

Enter your zip code on our site to compare private health plans to your employer’s!

What Benefits are Employers Required to Provide?

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Total compensation includes not only what a person is paid for their time on the job, but also all of the other obvious and often not obvious perks of working for a particular employer.

Dependent on state laws, employers have to pay into or provide certain programs that cover their staff in the event of something happening that could result in an inability to work:

  • Social Security Taxes
  • Unemployment Insurance
  • Workers Compensation
  • Disability Insurance
  • Family and Medical Leave (FMLA)

Additionally, under the Affordable Care Act, employers with more than 50 employees are required to provide health insurance that meets certain guidelines. If the employer does not meet these guidelines, they are required to pay into alternative insurance coverage for their employees.

How Much of the Benefits Packages do Employers Pay?

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With a minimum of legally required benefits, many of the perks of working for one employer over another are not as obvious and the majority of the cost paid by the employer.

As additions to standard benefits programs, employees often have the advantage of:

  • Group insurance plans including dental, vision, disability, and life
  • Retirement savings programs such as pensions or 401(k) plans
  • Profit sharing in the form of bonuses or wage increases
  • Wellness programs including onsite exercise equipment or nutritional counseling
  • Paid vacation time, bereavement days, or time to volunteer
  • Childcare allowances
  • Flexible work schedules or job sharing arrangements
  • Legal plans
  • Tuition reimbursement or onsite training

According to the National Compensation Survey, wages only account for about two-thirds of what an employer spends on their employees. When you add in all of the benefits, your Total Compensation package can give you a total value of 150 percent of your salary/wages.

For example, your employer pays you $20 per hour. When you add in all of the employer’s contributions to your insurance plans, Wellness programs, time off, and other benefits, your compensation plan may actually be worth $30 per hour.

These extras are what make the different between employers and, often, employee satisfaction.

How do I Decide to Elect My Employer’s Health Insurance Plan or Buy an Individual Plan?

The biggest benefit of staying with your employer’s health plan is the employer contribution. While you may believe that your premiums are too high, most people underestimate the impact of the cost covered by an employer.

Before you begin looking at your options outside of your group plan, you can ask your employer to complete the Employer Coverage Tool to help you determine what specifics to look for when comparing plans. As part of the evaluation process, you’ll want to compare the following aspects of plans

  • Premium
  • Co-pays
  • Deductibles
  • Services/treatments are covered
  • Percentage of services/treatments are covered
  • Enrollment period
  • If you qualify for financial assistance for an individual plan

Employers understand that healthy employees are more productive and miss work less than those who suffer from untreated illness or chronic medical concerns. The best treatment is prevention and the first step is to ensure that employees have access to affordable healthcare.

Why do employers offer health insurance? It is in their best interest to care for their employees in order to make their human resources as productive as possible.

Enter your zip below to compare your employer’s health offerings to your state’s top private providers!

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