It's hard to deny the impact that comprehensive health insurance coverage can provide.

With the right approach to health insurance benefits, a person and their family can truly breathe when it comes to their health. Not only will they be able to access essential care without additional barriers, but finances will not stand in the way of good health.

In the absence of a robust universal healthcare system, in which both publicly funded healthcare operates in conjunction with privately funded ones, sometimes employers are mandated to provide supplementary health plans and benefits.

And in the case that they aren't mandated to provide health coverage, they are faced with the decision if they should voluntarily opt to offer health insurance coverage to employees - even when it isn't enforced.

In this article, we will take a closer look at what exactly a health insurance plan can cover, and whether or not employers have to provide health insurance benefits to their employees.

What Does Health Coverage Include?

A health coverage plan from an employer often includes essential health benefits required by the Affordable Care Act, such as preventive care, hospitalization, prescription drugs, maternity care, mental health services, and emergency care. 

The specifics of the coverage may vary depending on the plan and the employer's choices, but the aim is to provide comprehensive healthcare coverage for eligible employees and their dependents.

Here is a breakdown of some of the many benefits that are often offered by employers:

  • Healthcare services:
  • Vision care (e.g. eye exams, glasses, contact lenses)
  • Dental care (e.g. cleanings, fillings, root canals)
  • Rehabilitation services (e.g. physical therapy, occupational therapy)
  • Chiropractic care (e.g. spinal adjustments, massage)
  • Alternative medicine (e.g. acupuncture, naturopathy)
  • Wellness programs (e.g. gym memberships, weight loss programs)
  • Coverage for eligible employees and their dependents:
  • Eligibility may depend on factors such as hours worked, job title, and length of employment
  • Dependents may include spouses, children, and even domestic partners in some cases
  • Employers may require employees to pay a portion of the premiums for their coverage, but this can vary depending on the plan and the employer's policies

Employers in Countries That Do Not Have to Offer Health Insurance to Employees

While not all countries are legally mandated to offer healthcare insurance to their employees, many choose to offer employer-sponsored health benefits and plans. These countries include Canada (single taxpayer system), the UK (similar to Canada, most eligible services are government-covered), and Hong Kong (a mix of public and private healthcare available).

Taxpayer dollars, largely from personal income taxes, go to fund the public healthcare systems in these countries. To supplement the eligible healthcare costs for services or increase the availability in obtaining public healthcare services where waiting times are often long, employers in these places often offer healthcare benefits and plans to employees.

Employers in Countries That (Do) Have to offer Health Insurance to Employees

In contrast, countries including the US, China, parts of the Middle East and Africa do not have universal healthcare and employers therefore are legally mandated to offer health benefits that each meet a minimum threshold. 

In the US, this is because one of the two social security taxes on health, the Medicare Tax, that comes out of an employee's earnings each paycheck does not provide a safety net for employees and the majority of the working population. 

Instead, it assists eligible individuals including those who are 65 or older. Likewise, the federally and state-withheld personal income taxes of employees, which fund social and economic programs including healthcare among others, do not translate into public healthcare for employees or those in lower income brackets. 

The Affordable Care Act (AFA) requires employers with more than 50 employees to meet the “minimum value [of] at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan.” However, this is not the case and millions of Americans are still left uninsured. 

In China, where near-universal healthcare exists with 95% of the population being able to access public healthcare, the coverage of multiple areas is still not extensive enough for individuals.

Rules for Offering Health Insurance to Employees

Here are the rules as well as common practices for the countries that are legally mandated to offer employer-sponsored healthcare.

United States

Employers typically offer: 

  • A type of High Deductible Health Plan (HDHP) alone 
  • An HDHP with only one but not both of the following benefits: an FSA (Flexible Spending Account) or HSA (Health Savings Account)

This is because an employee can contribute only to either one FSA or HSA, but not both. 

There are total annual HSAs and FSAs contribution limits (employers’ and employees’), HDHP minimum deductibles and out-of-pocket maximums. 

Where employers offer health insurance, they, like their employees, are not obligated to contribute but typically do. The shared costs include health insurance premiums and matching employer contributions into FSAs or HSAs. 

If an HDHP does not offer dental or vision coverage, two healthcare services employees find great benefit in further to those of other covered services, an FSA or HSA, tax-free upon withdrawal, aims to help employees partially supplement the costs of their high deductibles, co-payments, co-insurance, and additional out-of-pocket costs, all of which often exceed the cost of the eligible in-network healthcare services they seek. 

Up to certain limits, total premiums (employer contribution and employer-withheld employee contribution) for HDHPs and pre-tax HSA contributions (not subject to social security [FICA] taxes: Social Security Tax and Medicare Tax) are tax-deductible for employers, lowering their overall corporate income tax liability. 

Likewise, with limitations, employees make pre-tax payments to their portion of premiums for HDHP and contributions to HSA and FSA, reducing their personal income tax liability. According to Aon, the total plan cost per employer, not including HSA and FSA benefits, was US $13,020 in 2022 and is estimated to rise to US $13,800 in 2023. These amounts change every year as per the Internal Revenue Service.

China

Employers must offer medical insurance, one of five types of social security, by matching employee contributions. Chinese companies typically contribute 9.8% of an employee’s salary while 2% is the employer-withheld amount for employee contributions. 

Employees’ out-of-pocket costs are in part covered for illness and non-occupational injuries serviced at in-network providers, reimbursable by the employer’s chosen health insurer. Medical insurance is tax-deductible for Chinese employers. 

The cost to employers in China offering health insurance to foreign workers is an average of ¥28,500 ≈ US$4,127 per employee. 

There are also rules for employers who usually offer supplementary health plans and benefits.

Canada

The rules for Canadian companies doing so are:

This means employers don’t provide coverage for visits to their general practitioner (GP) and a wide range of medical specialists, diagnostic tests and procedures, among many other services. 

Employees do not need to contribute to employer-sponsored health plans in any way.

Norms of Employer-Sponsored Health Benefits and Plans

The basic healthcare services that individuals need include:

  • Basic eye exams
  • Prescription drugs
  • Visits to a general practitioner
  • Dental and vision care

Even countries with limited or full public healthcare typically don’t cover basic services. Namely dental and vision care, making their inclusion into employer-sponsored health coverage popular. 

More extensive coverage that individuals may be interested in is access to medical specialists for preventative and emergency care, paramedical practitioners, hospitalization, and emergency out-of-country/province/state/region care. 

In the US, employers often supplement part of the costs of dental and vision care commonly offered. Canadian employer-sponsored plans often cover 100% of basic eye exams and up to a certain amount for vision care (e.g. prescriptive eyeglasses) every 24 months. Where the government’s first-payer has been exhausted, Canadian companies, with limitations, also cover 100% of out-of-country/province emergency benefits. 

As of 2015, the average cost of providing health insurance to employees was $8,330 CAD. In China, public healthcare for dental care could include tooth extraction, but oddly, does not include cleaning. In addition, only selected optometry services are covered. 

Most Chinese employers who offer health benefits do not cover dental or vision, leading to out-of-pocket costs borne by employees themselves. 

A related type of benefit that has become increasingly popular for Western employers to offer is wellness benefits, often reimbursing employees or providing them with a stipend to go to the gym.

Employer Advantages of Sponsoring Employee Healthcare

Competitive employers offer health plans with partial or full financial coverage and access to basic and extended services. 

Here are some of the employer advantages:

  • Attracting and retaining talent with compensation and benefits outside of base salary can potentially reduce the cost of hiring.
  • Lessening the financial burden on employees and workplace stress, translates into shrinking absenteeism, more engaged workers, higher employee morale, and greater overall productivity, contributing to the company’s bottom line.
  • Offering non-taxable benefits (commonly corporate-sponsored fitness plans) is easier to financially process, but is a cost that nevertheless boosts employees’ mental and emotional well-being, translating into improved overall performance for the company.
  • Some employer premiums paid to and contributions made to health plans can be made pre-tax and are tax-deductible, reducing total taxable corporate income.

Frequently Asked Questions

In the United States, do you have to Offer Health Insurance to All Employees?

No, employers in the United States are generally not required by Federal law to offer health insurance to all employees. 

Although, it is important to note that there are certain provisions under the Affordable Care Act (ACA) that apply to certain employers. The ACA mandates that employers with 50 or more full-time equivalent employees must offer affordable health insurance coverage to their full-time employees or face penalties. 

This is known as the employer mandate. Small businesses with fewer than 50 employees are not subject to the employer mandate but may still choose to offer health insurance as a benefit to attract and retain employees. 

It's important to note that state laws regarding health insurance may vary, so it's advisable to consult with an employment attorney or insurance professional for specific guidance.

What is the Affordable Care Act?

The Affordable Care Act (ACA) is a US healthcare reform law enacted in 2010. 

Its primary goals include making affordable health insurance available to more people through subsidies, expanding Medicaid coverage, and promoting innovative medical care delivery methods. The law requires employers with over 50 full-time equivalent employees to provide healthcare coverage or pay a penalty. 

A health coverage plan from an employer often includes essential health benefits required by the ACA, such as preventive care, hospitalization, prescription drugs, maternity care, mental health services, and emergency care. Other healthcare services that may be covered include dental, vision, and hearing care. 

Essential health benefits required by the ACA in the United States include:

  • Preventive care: annual check-ups, vaccines, and cancer screenings
  • Hospitalization: inpatient care, surgeries, and intensive care
  • Prescription drugs: medications for chronic conditions
  • Maternity care: prenatal care, labor and delivery, and postnatal care
  • Mental health services (e.g. therapy, counseling, substance abuse treatment)
  • Emergency care (e.g. ambulance services, emergency room visits)

Eligibility for coverage typically depends on factors such as employment status, hours worked, and job classification, and dependents may also be covered under the plan.

What Do Most Health Coverage Plans Cover?

Most health coverage plans cover a wide range of medical services and treatments. This often includes things like visits to primary physicians, specialists, and other medical providers.

Health insurance plans also typically cover or partially cover:

  • Outpatient care
  • Emergency services
  • Hospitalization
  • Maternity care (both before and after birth)
  • Mental health and substance abuse treatment
  • Prescription medication
  • Rehabilitation services
  • Laboratory services
  • Preventive and wellness services
  • Pediatric services 

It's important to note that the specific coverage and levels of care can vary depending on the insurance plan. Some plans may not cover certain treatments or may only cover them to a certain extent.

Partner With Borderless

Borderless is your partner in finding, onboarding and managing the employees that will help you grow your organization. For more information about international employment, including whether or not you should offer health insurance benefits to your team or not, Borderless is here to support you every step of the way.

Speak with our team today and find out how Borderless can help you operate in over 170 countries!

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