Based on the latest study it seems that most Americans are not aware of the fact that their health insurance might not be such a benefit after all.
There is a strong connection between salary and health insurance. Plus, most Americans benefit from this health coverage. Unfortunately, health care costs are higher every year, so health insurance increased as well.
However, salaries have remained almost the same. HCMS Group released a study in 2014, which showed that health care costs from over 300 employers increased by 10 percent, whereas salaries were only 4 percent higher.
In addition to this, employees with a lower income, less than $30.000 every year, had the highest discrepancy between health coverage and salary as their health plan costs had a 16.6 percent increase, while their salaries were only half percent higher.
One of the reasons is that your paycheck usually includes other factors, besides health coverage, such as services and taxes paid by the employer.
Nevertheless, as health care expenses increase, employers have to increase the health insurance as well. Unfortunately, salaries remained the same, leading to an imbalance between medical coverage and wage growth.
In addition to this, what most people do not know is that employers are more than happy to offer these benefits in the form of health coverage thanks to the fact that all group health plans are tax-free.
Therefore, companies prefer to increase health insurance rather than salaries, which are not free of taxes. In other words, even if they spend more money covering health benefits, they still avoid some expenses. Based on the statistics from the Congressional Budget Office, 153 million Americans benefit from health insurance from their workplace.
Furthermore, the data from the Kaiser Family Foundation in Tennessee showed that around fifty percent of the state residents have employer-based health coverage.
As a countermeasure, the government issued a law that will become effective starting from 2020. This regulation called the ‘Cadillac Tax’ will tackle expensive health plans, meaning employers will be prevented from offering substantial health coverage to their employees only to avoid paying more taxes.
However, it is not known yet whether the control of health insurance will improve wage growth or not. Still, many employees confessed that they would gladly choose a salary raise over a high medical coverage.