The End of Employer-Provided Health Insurance: Why It's Good for You and Your Company

Chapter 3The Solution—Employer-Funded Individual Health Insurance

Millions of working Americans believe that the only way they can get health insurance is from an employer. Until recently, their belief was accurate. However, in the past few years, a quiet revolution has changed the health insurance options available to employees and businesses:

• Individual health insurance has become cheaper and better than traditional employer-provided health insurance.
• Most Americans are now eligible for monthly federal tax subsidies (called premium tax credits) for individual health insurance if their employers do not offer employer-provided health insurance.
• New defined contribution programs allow employers to reimburse employees for individual health insurance costs.

These changes mean that your company can get out of its health insurance conundrum while still (1) enabling employees to obtain high-quality health insurance, and (2) providing a defined contribution health benefits program that helps recruit and retain the best employees.

The Coming Revolution—Defined Contribution Health Benefits

The health insurance market is undergoing a paradigm shift from an employer-driven defined benefit model to an individual-driven defined contribution model. The number of small and medium businesses (with less than 200 employees) offering coverage is down from 68 percent in 2000 to 57 percent in 2013 (see Figure 3.1). While the transition from employer-provided health insurance to individual health ...