Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • True employer-sponsored health insurance plans are ones in which the employer is paying a share of the premiums each month
  • Employers pay an average of 82 percent of the premiums for each employee health insurance plan
  • Accepting employer-sponsored health insurance is not required, but it can give you a better rate, more services, and no disqualification for pre-existing conditions
  • Companies with at least 50 full-time employees are required to offer affordable health insurance to 95 percent of workers
  • You need to make sure any health insurance plan you buy meets the criteria for new healthcare coverage laws

True employer-sponsored health insurance plans are ones in which the employer is paying a share of the expense for each covered employee.

Not every health plan offered by employers is necessarily a sponsored one.

There could be plans made available that the employer has not paid any money toward. These plans will either be as expensive as individual plans you can find on your own, or will have less than the basic coverage that has been mandated by new health reform law.

Most people refer to employer-sponsored health insurance as group health. All employees are pooled together in one group, with a mix of the following:

  • age
  • health condition
  • finances

Everyone benefits by getting better coverage than what could be afforded at the same price-point outside of the job. It covers employees, management, owners and all families. You will not automatically receive these benefits.

You have to “elect” coverage since you will most likely be paying a premium amount out of your pay.

Compare private health insurance options today by entering your zip code right here.

Who pays for the coverage?


There was a time of peak numbers in employers paying 100 percent of health insurance costs for employees, but it has dropped remarkably since 2002. The shift is mostly due to the steadily rising cost of medical care and premium rates.

It simply costs companies too much money to pull the entire financial burden alone. It was also deemed a poor way to offer benefits.

A one-size-fits-all approach to health insurance plans did not work for everyone. Plans can now be tailored to suit every employee need.

On average, workers are paying 18 percent towards the total cost as a single person and 29 percent as a family. Employers are paying slightly more of a contribution towards single employees than families.

Employers expect employees with families to pony up more money for the benefit of having coverage.

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How much does an employer-sponsored health insurance plan cost?

The exact cost of an employer-sponsored health insurance plan will depend on many factors. The average cost that American workers paid for health insurance as individuals in 2015 was 89 dollars a month.

The average for a worker with a family was 413 dollars a month. Some paid less and a few paid much more. What will make a difference in rate is:

  • Company providing the insurance and their underwriting procedure
  • How many are needing insured in a family
  • What annual out-of-pocket limit and deductible is chosen
  • Extras like vision, dental or prescription drug coverage

Is it mandatory to accept an employer-sponsored health insurance plan?


You have to “elect” to get health coverage from an employer-sponsored plan, which means you have to make the decision and sign up for the benefits.

It IS mandatory to accept the plan offered by your employer if it offers at least the minimal coverage needed by new healthcare law AND it costs less than 9.5 percent of your salary.

If there is no plan offered that meets the mandatory minimums of care, or if the plan costs higher than 9.5 percent of your wages, you can go to the marketplace and try to find affordable coverage.

You will qualify for the Premium Tax Credit to help offset the costs. If you are signing up benefits for your family as well, understand that they do NOT have to keep those premiums under eight percent of your adjusted gross income.

If they are, you can get coverage in the marketplace, but will not qualify for the Premium Tax Credit. If your employer offers affordable rates for you, as the employee, they have done what is required.

You can shop elsewhere, but you will not get the tax benefits by refusing adequate employer-sponsored coverage.

Are pre-existing conditions held against individuals?

Healthcare reform has made it to where no matter what your health condition in the past, present or future looks like, you cannot be denied coverage.

For employer-sponsored health plans, everyone is placed within one pool of employees that have a variety of levels in health status.

Statistically, many will be healthy and stay healthy which balances out the money that has to be spent caring for those with more health problems.

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Is providing health insurance coverage mandatory for ALL businesses?


Providing affordable healthcare plan options is mandatory for some businesses, but not all. Employers that have 50 full-time equivalent employees or more are required to provide affordable health insurance options for employees or face tax fees.

A full-time equivalent employee is one that works at least 30 hours a week, or 120 hours in a calendar month.

Companies that do not comply with offering health insurance, or provide coverage that is less than the mandatory minimum will be assessed a fee of $3,000 per employee that sought affordable options through the marketplace and were eligible for the Premium Tax Credit.

They either have to pay the $3,000 per employee or $2,000 per full-time employee, minus the first 30, whichever is the lesser amount.

The health law deems coverage “affordable” if it costs the employee no more than 9.5 percent of their salary, but it will be more than this percentage if adding dependents and spouse. As long as the employee coverage falls in the guidelines, the company will not get the tax fee.

Smaller corporations and businesses that employ 25 or fewer full-time workers, earning less than an average $50,000 a year can qualify for a 50 percent tax break on the premiums they pay for employee health plans.

Companies with 10 or fewer full-time employees, earning $20,000 a year or less can get 50 percent tax break on the premiums paid for health insurance for all employees. The companies have to pay at least 50 percent of the premiums for each covered employee.

What are the best health insurance plans?


Employer-sponsored health insurance plans can come in a variety of types, each with a selection of deductible and optional choices.

Below are a few of the more popular plans that allow employees to enjoy great healthcare coverage, at more affordable rates as a group.

Health Maintenance Organization (HMO)

An HMO is very restrictive on the providers you can use and receive coverage, but the choices are usually quality care. The copay tends to be very affordable and it is a popular type of plan for families.

Preferred Provider Organization (PPO)

PPO’s allow you to go outside of the provider network, but it costs you more money to do so. Other than this, they are fairly similar in function to an HMO. There is more paperwork involved if you pick a provider that is out-of-network.

Point of Service Plan (POS)

A POS plan combines features from both a PPO and an HMO. You can decide whether to use in-network or veer outside each time you need medical services.

Healthcare Savings Account (HSA)

An HSA is a tax-sheltered way of saving money to use towards deductibles and all other planned or unplanned medical expenses. It is a great addition to a beneficial health insurance plan.

You will not be overwhelmed if it comes time to pay the remainder of an annual out-of-pocket limit in cases of serious medical service need.

What are the mandatory minimums for provided health insurance coverage?

Most group policies offered as part of an employee-sponsored health plan will be ACA compliant. There are a few specifics ones that are not necessarily offering mandated minimums in health care coverage.

These are standalone benefits like vision or dental. Catastrophic health plans do not offer enough cost-sharing of the expenses like deductibles and copay. In order for a plan to be ACA compliant is has to cover an estimated 60 percent of the healthcare costs for an average person.

Chances are, if you are considering a plan that is extremely limited in benefits, has an astronomically high deductible, and does not cover basics like emergency room care, it is most likely not acceptable under the new healthcare laws.

Ask questions to find out what is considered ACA compliant and avoid plans that are not.

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Tax Breaks and Penalties for Employees Without Mandatory Health Insurance


The benefits of affordable healthcare for you and your family can be tremendous. The fees for NOT obtaining an affordable health plan can be costly.

If your employer offers sponsored health plans, check to see if they are within the 9.5 percent guideline. You will most likely get better rates through an employer than the marketplace.

The penalty for not having mandated minimal coverage health insurance is $695 per adult in the household and $347.50 per uncovered child below 18. That can add up to a hefty fee, especially if you have a large family.

If you are unable to find anything affordable, attempt to get an exemption so that you do not have fees assessed at tax time.

Best Features of Employer-Sponsored Health Insurance Plans

One of the most desirable features of employee-sponsored health insurance plans are the better prices you get for being in a pool of people AND the fact that the employer will be paying the larger share of the tab on premiums.

You will typically have a big selection of plans and specific plan options. You can tailor the benefits to meet the healthcare needs of you and your family.

Even if you have to take the lowest tier in plans, you can bet it has health benefits that are usable from day one.

Contact your company representative that handles health insurance and discuss the plans that are available and see if there is an affordable option.

Increasing numbers of smaller companies are enjoying the benefits of tax relief by offering health insurance plans. It is the best place to start in your search for an affordable plan.

You can compare health insurance rates right here by entering your zip code into our free comparison tool.