What Percentage Of Salary Goes To Health Insurance?
While considering the health insurance program, you need to identify how much your organization will contribute. Often, a considerable amount needs to be covered by the employee. However, the many benefits of health insurance make it crucial for everyone. Check out this article to know how much health insurance is covered by employers.
Employers Pay Around 83% Health Insurance Per Coverage
Companies provide only 83% of health insurance for every claim. The rest needs to be covered by the employees. However, small companies cover a lesser amount. In small companies, employees often have to pay for half of the premium in single coverage. It is because the small companies cannot afford to pay for family health coverage like large corporations.
Employers often have tight budgets. But the increasing cost of health insurance is also a reason behind small companies finding it hard to provide health benefits. If you check for an online health insurance app, you will realize that its cost has increased by 22% in the last five years. In the previous ten years, health insurance costs have risen by 55%. Therefore, small companies look for alternative strategies for offering health benefits.
Health Reimbursement Arrangement
Small employers often opt for health reimbursement arrangements when they struggle with providing minimum health benefits. In this arrangement, employees are given an allowance for self-purchased health insurance. Employers can personally define their contribution with these arrangements. Therefore, small companies find health reimbursement arrangements more affordable.
How Health Reimbursement Arrangements Work
There are various steps involved in the health reimbursement process. Look at the steps below.
-
The Employer Sets An Allowance
Employers decide how much money for health reimbursement will be given to each employee. It includes tax-free money that the organization will provide employees for healthcare expenses. However, what qualifies under healthcare reimbursement is decided first. After allowances are set for each employee, it is not possible to exceed the budget.
-
Employees Purchase Health Insurance
Employees are required to choose a health insurance policy of their choice. Employees can look at a reliable online Health Insurance app to browse through plans. It is also possible to use the allowances for making eligible medical expenses. But employers often limit the medical costs according to their preference.
-
Employees Need To Submit Proof
Employees need to submit evidence of incurred expenses to get reimbursement. The expense needs to qualify under the list of eligible expenses. The proof is usually in the form of hospital bills or receipts.
-
Documents Are Reviewed
Before the reimbursement is provided, the documents of proof are reviewed. Employees need to submit documents to give evidence of purchased medical services. Employees can hire professionals to maintain the documents proving the expenses. The employer provides reimbursement only after the papers are reviewed. It can take some time to receive the reimbursement as the process of document verification is often lengthy. You need to ensure that you are submitting all the necessary documents to receive reimbursement from your employer.
Types Of HRA
There are two types of HRA that a small employer can choose to provide.
| Qualified Small Employer HRA | This is great for employers with less than 50 full-time employees. It is not required to provide group health insurance with this arrangement. It enables employees to pay for medical expenses, including self-purchased insurance premiums, till the maximum contribution level.
|
| Individual Coverage HRA | It is suitable for organisations with any number of employees. The arrangement revolves around providing health insurance premiums along with other expenses. Sometimes it is offered as a standalone health benefit. At other times, the arrangement is offered as a part of the organisation’s health benefit program. The company has to follow no restrictions if it chooses the individual coverage reimbursement policy. |
Closing Thoughts
You will find differences between the percentage of health insurance provided to employees of large and small companies. Most large companies offer traditional health insurance coverage. On the other hand, small companies look for alternative health reimbursement arrangements to provide health benefits.
You can download the Bajaj Health Finserv app to get more advice on health insurance policies. Choose the best health insurance with the app’s help, and don’t worry about your medical expenses again.
