Is Private Health Insurance Replacing Group Health Insurance for Employers?Sept 2007
In Farmington, New Mexico, state employees may soon be paying for
private health insurance instead of paying for group health insurance from their paychecks. And as employers and states alike find rates getting higher and higher, will this be a new phenomenon countrywide?
In the past, employers paid for most if not all of their employees' medical coverage, often extending that coverage to spouses and families at affordable rates. This is because
group health insurance has always been more affordable than private health insurance, due to the larger number of people on a single plan. Insurance agencies know that in a group only a small number of people will get sick, even while everyone is paying their premiums. Basically, odds are in their favor that they'll make money, not lose it.
But times are changing, and there's a lot of talk regarding the abandonment of group health insurance for a variety of reasons. Healthcare costs have skyrocketed, making it nearly impossible for employers to be able to insure their employees and still turn a profit. In Farmington, New Mexico the state employee medical insurance tab is slated to cost about $5.2 million next year, and $5.4 million in fiscal year 2009. Employees cover about 22% of the cost, or a total of $1.04 million, in their premium payments, while the city picks up the other 78%, or $3.7 million. So, switching their employees to a private health insurance agency could save a lot of money.
As agencies struggle to create a market for healthcare, new kinds of plans have also emerged, including those that offer lower-cost "cafeteria style" plans that only cover what the individual wants. And with a large number of employees about to retire and go on a different healthcare network, the state of New Mexico could save a lot of money by switching to a private carrier.
Facts on:
Replacing Group Health Insurance
Did you know...
In Farmington, New Mexico the state employee medical insurance tab is slated to cost about $5.2 million next year?
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What does that mean for the employees? It might mean less flexibility with doctors or care, and out-of-pocket costs like prescription drug coverage and deductibles could be higher.
In order to offset those costs, it's best to always attend yearly checkups for good medical advice, and maintain a healthy lifestyle in order to minimize the odds of becoming sick or getting injured.
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