Losing Your Group Health Insurance: Are you next?
The question is not whether your employer will withdraw its group health plan for employees, but when. The good news is that the alternatives are actually better than the current system.
Changing times are eroding the old system
When the group health insurance developed during World War II to attract a labor shortage, health care costs were relatively low and lifetime employment was common. While technology has made businesses more efficient, increased competition has tested non-profit margins in many industries. In an era of greater efficiency, costs of health care, by contrast, are constantly increasing from 2 to 3 times faster than inflation.
Five years of recession in employer-provided health insurance
In 2005 nearly 4.5 million fewer had employer-provided health insurance in 2000. The downward trend continued even during upturns in the economy between 2004 and 2005, when more than 2 million jobs were created. The decline affected all segments the workforce as full-time workers, people with college degrees, and even those with wages in the twenty percent. The decline was not limited by geography, with 34 states experiencing significant losses in coverage and no state experienced a significant increase.
Employer plans remaining health insurance are just
Many employers who have maintained coverage for their employees have had to cut benefits, raise deductibles, or increasing employee contributions required. Even Microsoft, which has always touted its generous health benefits has made cuts in prescription drug coverage. Bearing into account these risks and the fact that employees lose health coverage when they leave their employer, it is clear that the group health insurance can not be considered absolutely safe.
HRA, HSA, and individual health insurance
The good news is that instead of completely abandoning health benefits, more and more companies are the reimbursement of employees for their own individual and family health insurance through HRA (Health Reimbursement Arrangement). Individual health plans, including plans family, are more beneficial than group plans because the plan stays with the employee even if they leave their employer. And unlike group health plans, plans individual can not cut benefits. In addition, an individual medical claims or health alone can not cause an increase in premiums or loss of coverage.
The federal government has also intervened to make the individual health insurance more affordable to more Americans by enacting legislation for the establishment of the HSA (Health Savings Account) plans. An HSA plan is a tax-advantaged savings account linked to a high deductible insurance. Expenditures contributing to medical deduction can be paid with tax-free money from the HSA. The high-deductible plans were structured to reduce costs associated with processing of small claims and at the same time put more responsibility in managing personal health in the hands of consumers.
About the Author
Brad Miller is a Managing Partner for View Health Insurance. The company website, www.viewhealthinsurance.com offers free online Ohio health insurance quotes from multiple carriers. View Health Insurance is a full service Insurance Brokerage Firm specializing in health insurance quotes for individuals, families and the self employed.
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