Insurance contribution

[Rajesh Vishwash]

Hi Guys

I am new to USA working with Desi (Indian) consultancy since last few months.

They told me that they will pay major part in Insurance and after reaching here I found they will contribute few %.

Is there ny law by which states that employer has to pay minimum % insurance contribution ?


thanks

[Jeanne Boyarsky]

Rajesh Vishwash wrote:Is there ny law by which states that employer has to pay minimum % insurance contribution ?

No. Legally, they don't have to contribute anything. As of today. Things may change once the health care reform bill happens.

[Tim Holloway]

The whole idea of insurance being part of the benefits of a job is a legacy of the days when jobs were "permanent", and, like the pension plan, is no longer optimal for the present-day employment environment. All it takes is an attack of appendicitis during a 3-month between-jobs period and you could end up in serious trouble. COBRA was designed to mitigate that somewhat, but it doesn't do it very well. And it does nothing at all if we're all expected to become "entrepreneurs", like a certain former administration seemed to think we should.

But work-related insurance was never mandatory, just one of those perks. And when times get tough, perks go away. Especially the expensive ones.

[Mike Isano]

I'd be thankful they are even paying a small percentage or your insurance. It's a better deal than many people in the USA get.

[Luke Kolin]

Tim Holloway wrote:All it takes is an attack of appendicitis during a 3-month between-jobs period and you could end up in serious trouble.

Why is that? You keep paying your premiums and all is well.

And it does nothing at all if we're all expected to become "entrepreneurs", like a certain former administration seemed to think we should.

I had a private policy with an HSA for over two years, to take with me as I wanted to. Best darn policy I ever had.

But work-related insurance was never mandatory, just one of those perks. And when times get tough, perks go away. Especially the expensive ones.

Why would health insurance be considered a perk, any more than housing, a car or food? I don't want my employer providing those "perks" either. Just give me the money and let me spend it according to my priorities and choices, not my employer's or my fellow employees'.

Cheers!

Luke

[Tim Holloway]

Luke Kolin wrote:

Tim Holloway wrote:All it takes is an attack of appendicitis during a 3-month between-jobs period and you could end up in serious trouble.

Why is that? You keep paying your premiums and all is well.

I think most of us don't have individual health insurance policies, since we're used to having them from employers. The contention being made is that private health insurance is so expensive that a lot of people forgo it - especially since they'd expect to be back on an employer-supplied plan. That was me several times over, in fact. I tried to carry one away with me and it was absolutely prohibitive. So I didn't. Fortunately, my appendix didn't decide to explode in the mean time. I did,.however get nailed on the "preexisting condition" deal when I had a voluntary treatment get counted against me once. Cost me about $8000 in todays dollars. All out of my own pocket.

And it does nothing at all if we're all expected to become "entrepreneurs", like a certain former administration seemed to think we should.

Luke Kolin wrote:
I had a private policy with an HSA for over two years, to take with me as I wanted to. Best darn policy I ever had.

You probably ought to share that info, allowing for our restrictions on actually naming companies. Most places, the best you can hope for is COBRA, and it's decidedly not. So if there are any affordable options available, a lot of people are going to be interested, or so they tell me.

But work-related insurance was never mandatory, just one of those perks. And when times get tough, perks go away. Especially the expensive ones.

Luke Kolin wrote:

Why would health insurance be considered a perk, any more than housing, a car or food? I don't want my employer providing those "perks" either. Just give me the money and let me spend it according to my priorities and choices, not my employer's or my fellow employees'.

The problem here is that most employers can provide you with a lot more coverage for the buck than you can get spending it yourself, especially if you have condition that they can bump you into a more expensive pool on. Which is why the majority of us are addicted to the "choices" that our employers offer instead of opting out for buy-our-own plans. The private plans have a lot of cherry-picking in them, and it has occurred to me that there's more than a little resemblance between that and what was done in the mortgage industry, although there were no "big players" (corporations) forcing the pools wider in the mortgage business. The whole idea of an insurance pool is to spread the risks across width and time. The whole idea of a picked pool is to maximize profit at the expense of heightened risk. But the problem with risky action is that it's - risky. Sooner or later the number comes up.

Insurance, in fact, works best when you don't have a bunch of people who think that they can do better individually than in a group. If you could forsee everything that might go wrong in life, it would be counter-productive to have insurance at all. You could simply save up (and invest) for when you needed the cash just like I do for my next roof, due in about 5 years. Insurance isn't "free money", it's money that people pay in, the insurer invests, then pays claims back from the pool plus the ROI, and benefits from the profits. The whole concept only really took off when people got affluent enough to be able to invest against possible calamity.

In theory, what's being proposed in Congress these days is closer to your ideal than what we currently have. What we actually end up with is probably not going to be very pleasant, just less unpleasant (I hope) than sticking to an insurance model that's no longer applicable to how modern business works.

Luke Kolin wrote:
Cheers!

Luke

[Jeanne Boyarsky]

Luke Kolin wrote:Why would health insurance be considered a perk, any more than housing, a car or food?

Does a house cost X times more if you buy one yourself rather than 100 people buying 100 houses? And that's the problem. If insurance companies wanted to do business with individuals without charging an arm and a leg, maybe things would be different.

[Tim Holloway]

Jeanne Boyarsky wrote:

Luke Kolin wrote:Why would health insurance be considered a perk, any more than housing, a car or food?

Does a house cost X times more if you buy one yourself rather than 100 people buying 100 houses? And that's the problem. If insurance companies wanted to do business with individuals without charging an arm and a leg, maybe things would be different.

I think that analogy falls flat. Insurance companies deal with individuals all the time - generally via agencies - for auto (which already is required by law in my state) and various forms of life (term, whole life, annuities, etc.).

There's no inherent reason why health insurance should be different than other forms. As far as it goes, I used to get life insurance as a perk from my employer in addition to my private plans.

The main thing is, most people think that they should have health insurance, but unlike other forms of insurance, it's not generally convenient under the current scheme to buy our own.

That was OK as long as jobs were something you could count on keeping and most of us weren't self-employed. But when employment becomes unpredictable, having your insurance drop out from under you is not good. Murphy's Law dictates that the time when you need something is when you don't have it.

[Jeanne Boyarsky]

Tim Holloway wrote:I think that analogy falls flat. Insurance companies deal with individuals all the time - generally via agencies - for auto (which already is required by law in my state) and various forms of life (term, whole life, annuities, etc.).

Ok. Let's use your analogy . Why is there a premium for not being part of a group for health insurance but not car insurance?

[Tim Holloway]

I don't know if what I mentioned qualifies as analogy. And "premium" is perhaps not the best word to choose when referring to insurance, since they have their own use for the word. Oh well.

As to your actual question - why indeed? The main reason is that corporations have enough buying power to ensure that all their employees will be included, both the high-risk and the low-risk ones and all in between. The insurer can't cherry-pick the pool as with individual policies. At the same time, the usual retail/wholesale rules apply, the more you spend, the more concessions you can squeeze out of your vendors. But mostly, I think, because it grew up that way. If anyone actually planned it, it's news to me.

Up to a point. I worked for a place that went to being self-insured because they didn't like what any of their potential insurers was willing to offer.

I suppose that I should add a disclaimer: I've worked in insurance IT, and specifically in the areas involving statistical (actuarial) groupings and the cash reserves required (by state law) to back them up.

[Luke Kolin]

Tim Holloway wrote:The main reason is that corporations have enough buying power to ensure that all their employees will be included, both the high-risk and the low-risk ones and all in between.

If memory serves correctly, many corporations (especially larger) ones do not purchase "insurance". They actually self-insure, and merely use the insurance company as a benefits administrator and take advantage of the negotiated rates that the insurance company has with its affiliated providers.

Cheers!

Luke