What Does Cost Effective Mean When It Comes to Health Insurance?

Cost-effective health insurance usually means insurance that is cheaper to maintain than the cost of medical bills, but for businesses and employers, it has a slightly different meaning. Insurance for employers is cost effective when the employer gets more out of the program than it puts in and finds that the health insurance program does not interfere with its ability to cover other business-related costs.

Employee Cost Effectiveness

Employees are most likely to find an insurance plan cost effective when the premiums are less than they'd otherwise be paying for medical care. This generally means that the plan has to provide coverage for the employee's specific healthcare needs without adding to her costs. For example, a pregnant woman whose insurance does not cover her pregnancy might not find the insurance to be cost effective, no matter how inexpensive it is. Employees' perceptions of cost effectiveness can affect your health insurance decisions because if most employees don't think a program is cost effective, they won't buy it. This means that the benefits to you of offering insurance can be limited.

Cost of Program

A health insurance program won't be cost effective for your business, regardless of its benefits, if it severely cuts into your ability to pay for other things. For example, if covering employee health insurance means you have to reduce other benefits or pay lower wages, the employee retention and satisfaction benefits of health insurance could be diminished. Similarly, a program is not cost effective -- no matter how inexpensive it is relative to other programs -- if your business can't afford to pay or if the program cuts into your ability to grow.

Benefits of Program

Health insurance programs might seem like they offer few benefits to employers, but a 2003 study published in the "Milbank Quarterly" found several benefits. Employees report higher job satisfaction when their employers cover health insurance, and this can result in higher productivity. They may also take fewer sick days. The tax benefits of offering health insurance can also help reduce your business's tax liability.

Other Costs

With the advent of mandatory health insurance in some states and the coming implementation of the Affordable Care Act, many employers who do not offer health insurance will have to pay a fine. This means businesses will have to make new assessments of cost effectiveness and determine whether it is more costly to pay a fine and not reap the benefits of offering insurance or to pay the often high prices of employer-sponsored insurance.

cost effective - wydajeny, opłacający się

maintain - konserwować, podtrzymywać, zachowywać na tym samym poziomie
slightly - nieznacznie, nieco
get sth out - wziąć coś, wyciągnąć coś
put in - włożyć, wkładać
interfere - wtrącać się, kolidować
interfere with something - kolidować z czymś
ability - zdolność
cover - przykryć, nakryć, okryć; ukryć, zakryć
premium - nagroda, premia; składka na ubezpieczenie
otherwise - w przeciwnym wypadku, w przeciwnym razie
coverage - relacja, sprawozdanie
perception - wyobrażenie, spostrzeżenie; percepcja
regardless - bez względu na (coś), nie licząc się (z czymś), pomimo (czegoś)
retention - zachowanie, zatrzymanie, utrzymanie (np tytułu)
diminish - zmniejszać (się), maleć, ubywać
affordable - przystępny (w przystępnej cenie)
reap - zbierać (owoce pracy), korzystać (z wyniku czegoś)

źródło: http://smallbusiness.chron.com/cost-effective-mean-comes-health-insurance-66582.html