Sources of Family Health Insurance
In the United States, individuals obtain family medical insurance through one of two sources – either through their employer’s group plan or by purchasing it directly from a private health insurance provider. Both methods of obtaining private health insurance have both benefits and drawbacks.
Employers began to sponsor the purchase of health insurance on a large scale during World War II, when employers were prohibited from raising wages high enough to attract sufficient workers. In order to recruit more employees, companies began to offer fringe benefits such as sick leave and private health insurance, as these were not subject to wage controls. Employer sponsored private health insurance has both advantages and disadvantages. One positive aspect of employer sponsored private health insurance is that it is generally provided for free or at a greatly discounted rate as a fringe benefit. However, when employers sponsor the purchase of private health insurance, employees are generally restricted in their choice of private healthcare plan, and in some cases may be required by the plan to attend certain doctors in order to receive coverage, which may be undesirable, inconvenient or even impossible.
Individuals may sometimes purchase private health insurance direct from the insurer of their choice. One advantage of this direct purchase method is the flexibility attached to being able to choose whichever insurer and whichever plan an individual likes, rather than being restricted by the employer’s choice, as is the case with employer sponsored private health insurance plans. However, purchasing private health insurance directly from an insurer can be expensive, and may not even be possible with some insurers (who might deal only with employers). This is not a popular option with low-income families whose main income earner’s employer sponsors a health plan because these families may see no point in paying for something that the employer provides for a greatly reduced cost.
Whichever path you choose to take, it is important to remember that all policies should be examined on the basis of the benefits they offer, as well as price. Individually purchased and employer sponsored plans may be similar in many ways, but can also differ in some key areas. As such, proper inquiry into what is best for your situation should be undertaken before making a purchase decision.