MSNBC on Pros and Cons of employer health care

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Today financial editor Jean Chatzky examines the pros and cons of sticking with the coverage you can get through your employer. It's a basic list of items to compare, and goodness knows I've written here about things like checking into whetehr you can omit maternity coverage if you're not having any more kids and therfore save yourself some money.

Still, given all I've read and written lately about what happens when your coverage fails you, there's not nearly enough about the caveats. Caveats like look out for annual or lifetime caps. Caveats like at least reviewing what would happen if something major impacted your health.

You simply can't argue with her final bit of advice:

"Finally, don't even think of going bare: Among those filing bankruptcy each year in America, the largest number of them do so because they had health problems — and no insurance. I know it's tempting to pocket the cash. It's also incredibly short-sighted."

But I wish here was a little more harsh reality to go along with the pretty basic "compare costs" advice.

Comments

[Bob]

Many smaller employers (fewer than 50 employees) are feeling the crunch more so than larger employer groups. This is especially true as you migrate towards smaller employers, 10 and fewer employees.

In many situations a group health plan is 2 - 3x the cost of an individual policy for similar coverage. But that is a misleading statement.

"Similar" coverage looks strictly at benefits and does not reflect underwriting risk adjustment. In most states, group health insurance carriers are prohibited from refusing coverage to a group and/or singling out an individual for restricted coverage. This overrides the risk selection process carriers use in the individual health insurance market to weed out the sickies and accept those whose risk profile meets their criteria for a profitable block of business.

One of the major contributors to manic inflation in group health coverage is HIPAA. That same law that protects your rights to privacy, and allows you to seamlessly move from one group health plan to another also adds as much as 50% to the cost of an employer group health plan.

This results in 2 entirely different markets for consumers. Healthy consumers can opt for individual coverage and pick the plan they want and almost name their premium. That's good as long as you are within the 20% or so of consumers healthy enough to acquire unrestricted health insurance cover.

The other 80% either must accept rate-ups or riders to coverage, move to an employer plan where there are no such restrictions, or simply go without cover.

[Blue Cross of California]

Employer health care can be a great factor for many employees.