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Termination And Change Of Health Insurance Policy

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Question:

Describe about the Termination and Change of Health Insurance Policy?

 

Answer:

Introduction

The insurance intended to claim or use in order to cover the medical expense incurred for the treatment of diseases among the individuals is called as health insurance. The individuals who work with government firms or private sector are usually availing the facility of health insurances. The employer can pay the insurance premiums on behalf of their employees. However some of the employers can collect the premium from the employers. According to annual survey, the annual premiums sponsored by the employer towards payment in order to cover the health coverage for the employee and their family have reached to $16,834 in 2014 (Gary, Matthew, Nirmita & Anthony, 2014). The expenses to be paid by the insurer are expecting to be increased day by day toward payment of medical bills. Therefore the insurance companies who are offering the health insurances policies are increasing the premiums and the renewals. By considering these facts, the employers are rethinking in the benefits to be provided to their employees. The health insurances offering by the employer or insurance companies have advantages and disadvantages.

The present paper describes the advantages and disadvantages of termination of health insurance coverage and moving the employees to the health insurance exchange.

 

Background:

The employer has decided to terminate the plan of health insurance to the employees and intending the employees to move towards exchange of health insurance

Health insurance

Across the world, most people and their family members are getting benefitted form the health insurance through their employer and the health insurance are called as ‘group health insurance’. Varity of insurance policies are available in the market to cater the health needs in general and for the treatment of specific diseases in particular (NCCS, 2012). The insurances include comprehensive health coverage (cover all medical expenses including prescription drugs); fee-for-service (pay a portion of bill); managed care policies (care can be provided from the network of participating providers). The insurances can be long term renewable and short term renewable or non-renewable type policies. The plan depends on the employee and employer. In the present case, the employer wanted to terminate the health insurance plan and move the employees to the health insurance exchange in order to avail the purchase of healthcare plans. The probable causes for changing the policy are (i) to minimize the expenses towards premium to be paid for insurance providers and/or (ii) increase the cost of premiums. Similarly, a company (The International Business Machines Corporation, IBM) was terminated the policy for Medicare eligible retirees due to increase in the projected cost. IBM was exchanged the policy to Extend Health so that the employees can choose the policies as per their requirement (Tyler, 2013). The decision of changing the policy would create competition among the employers and reduces the cost. However the employers who are changing the policies for the wealth of organization would show some potential impacts on employees and employers. The new decision of employer can pose advantages and disadvantages as described below.

 

Advantages

  • The insurance coverage may be chargeable from the employers, if the shift to the other employer may be waived off. Example, Employees from pharmaceutical company-A are required to pay the premium to the employer. If the employees are moved to other company-B may be waived off. In such case, the employees will move to the companies where they get maximum benefits. In another case, if the existing employer is allowing moving the employees toward the purchase of their own plans, it facilitates them to purchase the plans as per their requirement.

  • The decision offers a benefit to the employees who wanted to change the existing employer. The employees need health coverage during interim (transit period) between existing employer and new employer. Certain insurances companies offer such insurance E.g., Cobra insurance (HIA, n.d) offer 18 months health insurance coverage even if they leave the existing employer.

  • The health insurance premiums sponsored by employer are not subject to the income tax (Buchmueller, Carey & Levy, 2013). So the termination of plans can not offer any advantage in terms of tax to be paid to the government.

  • The termination of plan and allowing moving towards purchase of plans as per their requirement encourages the new joinees in the organization. It also motivates the employees from other organization those are not offering health insurance plans. Example, one regional pharmaceutical company does not offer the health insurance coverage, whereas multi-national pharmaceutical company do offer the insurance plans offer entire family. In such case, the work force from regional company moves to the multinational company.

  • The new decision may offer the employees to cover more diseases. E.g., certain diseases can be covered in one plan and other can be covered in new plan. E.g., Treatment of cancer may be covered with huge coverage in new plan

  • The termination of existing plan and shifting to alternative plan may ensure coverage for all the family members and all the diseases that the employer do not offer such broad coverage. Hence the new plan may be more beneficial to the employer.
 

Disadvantages

  • Employees with high income, the premium that is deducted from the salary can be considered for the exemption of the income tax. In case of termination of plan can force the employees to pay the income tax.

  • The employers who give waive off in the premiums to be paid towards policies to the insurance providers’ poses burden to the little earning employees. The employees have to purchase cost in effective plans from insurance providers

  • Dedicated and high caliber work force is the assets for the employer. In some of the situations, such workers are usually adhered to the employer if he/she thinks that the healthcare insurance plans are beneficial to them and their family members (O’Brien, 2003). In case of termination of the plan, such work force is difficult to retain at employer. They will rethink of continuing with the employer.

  • The employer who offer good health care plans without charging the premiums to the employees make the employees to stay for very long period at the employer. So the new technologies or initiatives can be expected much from the employer. Sometimes, more stay for the employees also reduces the work output.

  • The termination of existing plan and shifting to alternative plan may not ensure coverage for all the family members and all the diseases that the employer do
 

Conclusions:

The advantages and disadvantages of termination of health insurance and switching to other plans are discussed.

 

References:

Buchmueller, T., Carey, C & Levy, HG. (2013) Will employers drop health insurance coverage because of the affordable care act? Health Aff (Millwood). 32(9):1522-1530.

Gary, C., Matthew, R., Nirmita, P & Anthony, D (Sep-2014) Employer Health Benefits Survey Retrieved from https://files.kff.org/attachment/2014-employer-health-benefits-survey-full-report

HIA (Health insurance after getting laid off vs quiting vs getting fired, n.d) Retrieved from https://usinsuranceagents.com/health-insurance/insurance-after-getting-laid-off-vs-quiting-vs-getting-fired/

NCCS (National Coalition for Cancer Survivorship, 2012). What cancer survivors need to know about health insurance Retrieved from https://www.canceradvocacy.org/wp-content/uploads/2013/01/Health-Insurance.pdf

O’Brien, E (2003) Employers’ Benefits from Workers’ Health Insurance. The Milbank Quarterly 81(1), 5-43

Tyler, D(2013) IBM Terminates Company-Sponsored Retiree Health Plan Due To Soaring Costs Retrieved from https://www.zerohedge.com/news/2013-09-07/ibm-terminates-company-sponsored-retiree-health-plan-due-soaring-costs
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