How to Make Sense of Employers' Health Care Benefits - or Lack Thereof
By Robin Reshwan
Tis the season for open enrollment. If you are new to the insurance game, you most likely have until Feb. 15, 2015, to make a decision regarding which health care insurance plan to select. If you have insurance, you probably completed your coverage selection just recently.
"Universal health care" certainly has its share of fans and haters. However, should job seekers limit their career searches only to employers who offer medical insurance? Keep these tips in mind as you make sense of today's varied benefit packages:
Get informed. Explore the health care exchange for your state. Even if you currently have insurance, being informed is always better than being in the dark. After all, being uninformed can result in receiving a $6,000 bill for that "optional" MRI you received after breaking your leg playing flag football and heading to the nearest MRI clinic, which turns out is not in your network and wasn't recommended by your primary care physician. Oh yeah, and those two extra bandages they gave you for your scraped hand cost $200, because they weren't coded as "medically necessary" for your leg care.
Joking aside, many new job seekers and gainfully employed professionals think having to secure and pay for their own medical benefits is completely not an option for them. But it is if it needs to be.
By logging onto your state's health insurance website, you can review different levels of health care insurance and see pricing for each. This is very powerful information for several reasons. First, you will see that most of the major insurance plans used by employers are available to you directly through the website. Second, if you have low or no income, you can find out if you qualify for reduced plan rates or tax incentives. Third, you can calculate, fairly accurately, what your monthly insurance expenses would be if you need to self-insure. And finally, you can be more appreciative of your parents or employer for reviewing all these options in the past while you got the benefit of just being covered.
If the employer is small and doesn't offer insurance: Small employers are not mandated to offer subsidized insurance to their employees, so many do not offer insurance. Yes, some of those employers may be cheap, but most are simply good businesspeople. The costs for a business to insure a small group of employees is often more expensive than if the employer gave their employees a stipend to self-insure. In other words, their insurance dollars buy more if paid to you as a non-taxed expense than if that money was used for their own plan.
Don't avoid an employer solely because it's willing to offer you monthly reimbursement for part or all of your insurance premium. That's usually a sign of a business owner who has done the math and is trying to give employees the maximum benefit for every dollar spent. With this employer, you should find out what the monthly reimbursement is and what you need to do or submit to qualify for this benefit. Often, it is as simple as buying insurance for yourself and submitting the payment receipt each month just like you would an expense report. The company's reimbursement payment to you is not taxed, so you get the full value.
If you're offered insurance, but it's a 50-50 split: Larger employers are mandated to pay at least half of the employee's monthly premium. However, spouse or family coverage is completely optional, meaning that the employer does not have to contribute to the monthly premium.
Many employers will stop at that 50-percent coverage for each employee and may offer spouse or dependent coverage at 100-percent cost to you. This is a scenario in which researching comparable options on the health care exchange or sites like ehealthinsurance.com can assist you in determining if it's cheaper to cover your family via your employer or by buying a separate policy for them. There is no doubt that one plan is simpler, but it may not always be the cheapest option.
If you're offered insurance at a high percentage for the whole family: This is an outstanding benefit and certainly makes health care insurance decisions easy for you. However, don't let the simplicity woo you into accepting a not-so-perfect role just for this benefit. Determining the financial value of full or partial medical insurance coverage is the best way to put this benefit into perspective when it comes to making informed decisions regarding career options.
Do the math. Let's say you have a great opportunity at a small company with an excellent mentor and exciting projects – but no benefits. Before passing on the role, review the math. For a single person, it may cost between $100 and $250 per month for medical insurance coverage with no government assistance. If you take the higher premium scenario, purchasing insurance would cost you about $3,000 per year. Since we know that many employers offer 50 percent insurance premium coverage, taking a role without benefits puts you at approximately a $1,500 disadvantage compared to the "average" employer's benefit. Now you need to determine if the benefits of the role outweigh the $1,500 expense to you. While no one wants additional expenses, $125 month is probably not significant enough to immediately dismiss a great career opportunity.
In short, before you turn a blind eye to career positions just because they don't offer medical insurance benefits, take a minute to calculate. If the role itself is great for you, the numbers often add up to a healthier picture than you may have thought.
Remember: Medical issues are expensive no matter who pays your premium. It's typically the deductibles, out-of-pocket maximums and optional bandages that give the most significant financial surprises. Here's to a healthy 2015 – professionally and otherwise.