Saturday, May 14, 2011

U.S. Employee Sponsored Medical Health Insurance: A Brief Overview

Medical health insurance is vital for a number of reasons. One- people receive protection against uncertain and hefty medical expenses and two- they are assured for quality healthcare services. In addition to this, health insurance is related to improved health outcomes, lower mortality and hence more productive employees.

The statics of U.S. health insurance market indicate that nearly 2/3rd of the U.S. population is under the age of 65 years and receive employer-sponsored health insurance. While most of the companies offer health insurance to their employees as a fringe benefit, in an estimate there is at least one member is each family who is working with companies providing health insurance. Employer-sponsored medical health insurance is a lucrative option to offer because of the inherent tax treatment benefits to both the employer and the employee. In addition to this, a company sponsored health insurance is less expensive than a private health insurance for the same set of benefits. 
Generally, company sponsored insurance applies certain conditions such as the employee shall pay certain part of the premium, the employee shall be available at work for a defined number of hours per week, the employee has to abide by the waiting period before the benefits shall not effect, etc. Companies with large number of employees are most likely to offer employee medical insurance against companies with less employees. Small companies are less likely to provide health insurance as fringe benefits due to high costs of underwriting and administration for small number of employees adding to heavy premiums. Also, since small firms make fewer profits, they lack resources to divert for employee insurance schemes. Furthermore, companies who have low-wage workers, high employee turnover, no workers' union and a huge number of part-time employees are less likely to provide medical insurance. On the flip side, the stability of company sponsored insurance system is supported by government as they receive tax subsidy that encourages the pooling of risk necessary for successful functioning of insurance.

While most of the U.S. citizens are covered under company sponsored insurance system (for families & their dependents), many of the rest are insured though public programs such as Medicaid & SCHIP (State Children's Health Insurance Program) or through privately purchased medical insurance schemes.

In nutshell, while America's company sponsored medical insurance system continue to provide healthcare insurance to a majority of U.S. citizens & their families, there is a significant number of Americans who lack coverage against hefty medical and healthcare expenses.

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