Choice Stories

August 20, 2020

Comprehensive Group Health Beats Other Health Coverage

Since the Affordable Care Act (ACA) became law 10 years ago, the number of Americans without health insurance has declined dramatically. The uninsured rate in California was 17.2% in 2013, as compared to 7.2% in 2018. (Final figures for 2019 are not yet available.) Among those with health insurance, a majority get their coverage through their employer.

California is one of the five states with the greatest number of people getting their health insurance through an employer-sponsored plan, according to the Kaiser Family Foundation (KFF) data. Based on 2019 reporting, 47% of Californians, or about 18.3 million people, have employment-based health insurance.

Businesses choose to offer health insurance to employees for many reasons, including:

  • Tax Advantages: Employers can generally deduct their expenses for providing health insurance to employees and dependents on the state and federal taxes for their businesses.
  • Recruitment: Offering health insurance and other benefits helps employers attract new employees, according to a survey by the Society for Human Resource Management (SHRM).
  • Employee Retention: Another SHRM survey found half of employees consider benefits a key factor in their decision to stay on the job. In fact, 46% reported health insurance was the deciding factor or a positive influence in selecting their job.
  • Comprehensive Health Insurance Protects Employees: The Essential Health Benefits (EHBs) required by the ACA provide valuable coverage for employees, including emergency services, hospitalization, patient services, maternity care, lab services, preventive and wellness services, chronic disease management benefits, and more.

Comparing Plans

Employers interested in evaluating health coverage can benefit by talking with an employee benefits agent. The services of an agent are typically available at no cost, and can often save an employer money. That’s because an agent will know your local marketplace, the health care providers that are part of each health plan’s network, and the value-added benefits that may be available.

Sometimes a business owner comparing plans without guidance from a licensed insurance professional may be inclined to think individual health insurance or a blanket health insurance policy is a more affordable alternative to group health coverage. However, there are limitations in those kinds of policies.

For example, a blanket health policy may offer only limited benefits, perhaps in connection with an accident. Blanket health insurance policies also typically differ from a group health policy, because a blanket policy may offer coverage up to a specified limit -- $5,000, $10,000, $25,000, or $50,000 during the life of the plan. In contrast, an ACA compliant group health plan cannot limit coverage to a specified amount, although members could be subject to certain co-pay amounts or a coinsurance amount.

Likewise, an employer-sponsored group health plan may be better than coverage through an IFP (Individual and Family Plan) or Association Health Plan, also known as a multiple employer welfare arrangement (MEWA). These plans may limit payouts and often do not include the broad range of covered services under an ACA-compliant group health plan. In fact, California law strictly limits and regulates health insurance through associations, as outlined in a 2019 memo distributed by the California Association of Managed Health Care. State regulators and California legislators believe residents are better served by other health insurance programs.

Finding the Right Coverage for Your Employees

Staying healthy and having access to health care is important to employees (and their family members). That’s especially true during times like those we’re facing right now. If you want to find out more about the advantages, costs, and value-added benefits of group health care, talk with your insurance agent. If you don’t have an agent, you can find one near you using our agent directory.

Your Beginner's Guide to Choosing a Small Business Employee Benefits Program

Do you need help choosing the right health benefits for your employees?
This guide can help!