Health insurance - what’s considered normal?
October 14, 2021
A topic that frequently arises for new employers in the U.S. is health insurance. While employer- provided health insurance does sometimes feature in employee benefit packages, it’s seldomly considered central to an employee’s decision of whether to accept a position. Accordingly, when a European company’s new U.S. subsidiary sets about hiring its first U.S.-based employee, it starts with a knowledge deficit – employees in the U.S. are used to factoring health insurance into their life decisions, and many will have accepted/rejected positions based, at least partly, on the extent of the prospective employer’s health insurance plan. European hiring managers on the other hand will have little knowledge of the U.S. healthcare system, let alone the standard practice of U.S. employers. The two questions we hear most from new employers are : a) do we have to provide health insurance to employees, and b) what’s reasonable? A subset of the second is “the employee we’re interested in hiring is telling us that X is what’s standard in the industry. Is it?”
The answer to the first question is no. There is no requirement for a small employer to provide health insurance to their employees, though there are prohibitions on selectively providing health insurance to certain employees and not others, fines for larger employers who don’t provide health insurance to their employees, and various tax benefits to be realized if employers do provide health insurance.
The second question is more difficult to answer – smaller/leaner employers generally have less financial ability to provide health insurance to their employers and if they provide insurance at all, will often require the employee to cover most, if not all, of the expense. On the other hand, larger corporate employers will almost universally provide subsidized insurance to their employees with a reasonable employee-side contribution. Ultimately for a small employer it’s a case of negotiation – a more expensive health insurance benefit on the employer’s side could be negotiated in exchange for a lower salary. The last question is easier to answer – if an employee is telling an employer that top-tier fully subsidized health insurance contributions are standard in the U.S., they’re trying to take advantage of the employer’s knowledge deficit.
