Voluntary employer-financed health insurance Affiliation: Introduction The voluntary employer-financed health insurance which is also known as the Employer Sponsored Insurance (ESI) is the type of health care insurance cover plan provided by an employer to the employees not as a mandatory plan but as way to attract more employees to the employment. The employer in this health care plan has the upper hand on which specific services the health care plan will cover and how much each employee will be contributing. The contributions depend on the salary the employee is being paid and hence with increase in salary to the employees, the employer deducts more for the insurance plan (Maxwell, 2012).
It is a win-win health care cover plan for both the employer and employee. More advantages of the health care cover to the business are provided below. Advantages Group health tax reduction When an employer purchases the health care insurance for the employees, the purchase is usually made as a group and this is more advantageous. This is so because a tax reduction plan is enforced in group purchases of the insurance giving the employee a reprieve in the taxes and cost of insurance.
The employer does not therefore end up spending a lot of money on the health care plan as long as the purchases of the insurance plan are conducted as a group. This is an advantage to small businesses that are still trying to establish themselves in the market while at the same time trying to make a profit and break even. Attracting employees With the increase in health care costs and a mandate health insurance for everyone with the Obamacare, people are seeking jobs with a health insurance cover.
Employers can use this form of health care plan to attract more employees into the business be they on low or high wages. The advantage of this cover is more pronounced in minimum wage jobs and especially now with the enforcement of the Obamacare. These employees have low wages and hence their plan will be simple and not cost a lot to the employer. These employees even with their minimum wage are still required to contribute part of their wage to the health care cover plan even though it is a simple one.
This cuts costs of the health care to the employer. Brand establishment When this health care plan is used and attracts employees, the business continues to grow and expand. This leads to the business establishing itself as its own brand and continues being recognized. The employer does not need to spend a lot of money on expensive health care cover at the starting level of the business. As long as the business provides the employees with health care cover plan for them and their families, and this cover increases, employees will reduce their turnover rate.
With reduced turnover, the business reduces the costs of advertisement and constant hiring and hence grows and expands establishing itself as a brand in the industry. Choosing the package This health care plan allows the employer to choose which health care packages it will offer to employees. This choice depends on the wages of the employee as well as job level. Those at the higher level are offered more packages whereas those at the bottom are offered just the basic packages.
The advantage to the business is that the more packages offered, the more the employee is deducted and hence less is incurred by the business in the long run. This is possible because of the sharing plan allowed in this health care plan. The business therefore does not have to shoulder the health care cost alone but has the employer to share with (Maxwell, 2012). Disadvantages Reduce turnover The major disadvantage with this plan is that the business still has to reduce part of its profits to pay for the health care of its employees.
The major disadvantage comes in when an employee has serious medical condition or their family member is a sickling. This will lead to more money being channeled towards health care of the patient and this may reduce the turnover of the business. This costs increases with the increases in sick cases depending on the package offered (Maxwell, 2012). Conclusion In conclusion, the voluntary employer-financed health insurance is the best health care cover plan for businesses whether they are small or large businesses.
The employees in businesses under this form of cover not only enjoy it as a fringe benefit but will have fulfilled the mandatory health care cover under the Obamacare being enforced at the moment in the nation. The business will not suffer major short back in their profits from the health care insurance, will satisfy its employees and be on the path of brand establishment. References Maxwell, N. L. (2012). The Health and Wealth of a Nation: Employer-based Health Insurance and the Affordable Care Act. Michigan: W. E.