Why is health insurance tied to your job?

Individual health insurance is better and preferable to employer-sponsored health insurance. Yep – and tomorrow I’ll tell you why. So why do most Americans have health insurance through their employers?

The fact that most people get their health insurance coverage through their job is an accident of history, the result of government-enacted wage freezes during World War 2. (To reward employees, companies got creative and started funding their healthcare since they couldn’t increase their pay directly). Think about it – would you ever ask your employer to take care of your homeowner’s policy or auto insurance? But health insurance (and, to a lesser extent, disability insurance) is different – people expect to get that at work.

There are people out there that believe the only way to get a good health insurance plan is to get one through your employer. And to be fair, for some people that’s true – specifically, those who have medical conditions or medical histories that would disqualify them from getting an individual health insurance policy. Group health insurance is “guarantee-issue,” meaning that you cannot be denied coverage for any reason if you qualify for an employer’s plan.

So group health insurance is the only option for some people. But for others, there is a better way, which we’ll discuss next time.