What Are Employer Obligations When Offering Health Insurance?

By Cathy Wilson Posted in Health Insurance News

Usually Not A Legal Requirement

No company in the United States is obligated to provide health insurance to their employees. While it is a nice perk to have group rates for coverage, there are no laws stating a company must offer a health care plan. Some states have changed this to provide more residents with coverage. In Massachusetts recent changes require companies that opt out of health insurance for employees must pay a surcharge. The surcharge can be as high as $295 per employee. In San Francisco, restaurants began adding a 4.5 percent fee to diner bills. HealthySF is a program that adds the surcharge to ensure small businesses has health insurance available for all employees.

In fact, a study released by Kaiser Family Foundation found that from 2000 to 2005, companies started dropping health insurance. In 2000, 65 percent of all companies in the United States offered a health insurance plan. Five years later, that number dropped to 60 percent. The rising cost of insurance plays an important role in this. The Los Angeles Times found health insurance rates rose more than 70 percent over those five years. Small companies are struggling to afford paying even a portion of health insurance.

COBRA Insurance

Under the law however, a company with 20 or more employees is required to offer COBRA health insurance policies to employees who have left their company. COBRA passed in 1985 requiring companies to offer health insurance to employees who have left the company for any reason. The COBRA policy covers the worker and his or her dependents and lasts specified period of time.

  • Active duty – Depends on time spent on active duty
  • Being fired – 18 months (29 months for disabled workers)
  • Company files bankruptcy – No time limit for retirees
  • Death – 36 months
  • Divorce or separation – 36 months
  • Leave of absence – 18 months
  • Strikes or lay-offs – 18 months (29 months for disabled workers)

If you can prove, as a company, the employee was fired for gross misconduct, you can refuse to offer COBRA coverage, but be prepared to offer undeniable proof.

Benefit To Offering Health Insurance

Employers who do offer health insurance generally find morale is improved. People appreciate knowing they are covered if a health issue arises. It’s a good way to entice new workers and improve employee satisfaction. If a company offers health insurance, they cannot offer it to some workers and not to others. Less ethical companies might try to avoid insurance smokers or obese workers. That’s a clear case of discrimination and they could be sued.

Related posts:

  1. I Had Health Insurance From My Employer And Left My Job, What Happens?
  2. What Does COBRA Insurance Mean?
  3. How Does Temporary Medical Health Insurance Coverage Work?
  4. What Does Disability Insurance For Health Care Entail?
  5. How Do Unemployed People Find Health Insurance?

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