Employee Benefits: Healthcare - Research Paper Example

Employee Benefits - Healthcare Introduction Employee benefit is one of the important elements incorporated in the human resource policies of an organisation. Every organisation devise benefit schemes to retain its valuable employees. From the perspective of the human resource management theories, employees are a major part of an organisation and without dedicated workforce an organisation cannot sustain in global market. Contextually, employee benefit scheme occupies a prominent place in an organizational human recourse management policy. Over the past decades, organizations including both government and commercial organizations have been providing healthcare benefits for its employees to support their as well as their family well-being. Nowadays, various policies are incorporated within the organisation with the intention to protect healthcare of an employees and their families. Besides, several insurance policies have been placed within the organizations in order to improve the productivity of its employees and to promote the good health of its employees and their families. Notably, organizations are spending huge amount in the form of premium to retain skilled employees. However, in the recent years significant changes has been witnessed with regard to employees healthcare benefits. Several factors have contributed towards this change while the impact of financial crisis and economic downturn experienced by the organizations worldwide has dramatic influence on employee’s healthcare benefits (Kronborg et al., 2008). Purpose of Study The recent economic turmoil as a result of global financial crisis and sluggish economic growth has adversely influence the financial as well as operational performance of organizations globally. Thus, to sustain in global market organizations haves been involved in extensive downsizing of its workforce in order to reduce extra expanses for balancing the financial health. In addition, the rapid growth of healthcare cost on one hand and reduced financial ability of the organizations on other has further culminated in massive cut in the available healthcare benefits provided to employees. The rising cost of premium rates accompanied with increasing financial instability has compelled organizations cut down yearly premium rates paid by the employers. The impact of such changes is perceived to be massive on the employees’ healthcare benefit schemes (Kronborg et al., 2008; Flynn et al., 2006). With this concern, the research focuses drawing the impact of rising healthcare costs on individuals and families with employment-based private insurance Opening Statement and Assumption Over the years, there have been considerable changes in the way healthcare services are being financed. Widespread reforms have been made towards meeting the growing healthcare needs of the United States (US) people. However, certain imperative aspects such as constantly rising healthcare cost and challenges of financing healthcare services have been apparent. Despite the continuous effort from the government to meet the healthcare needs of the US people, large proportion of American population are deprived of health insurance and are lacking adequate coverage. As a consequence, the ability of individual to access timely preventive and quality care can be seen to be reduced to a considerable extent. The major challenge in relation to the US health care system is that currently 47 million people are deprived from insurance coverage while other challenge includes the controlling of rapidly increasing health care cost (Kronborg et al., 2008; Flynn et al., 2006). Besides, employees in US are recognized to under insured with poor coverage which has contributed towards increasing burden associated with out-of pocket expenses followed by continuously increasing health insurance premiums. In addition, employers and health insurance companies are currently identified to be struggling with the increasing healthcare costs in the US. In this regard, the recent economic recession experienced by the nation has left significant impact on the US healthcare expenditure. As a result of this recession, the healthcare spending was slackened to 4.4% while employer-sponsored health insurance has fallen dramatically. It is worth mentioning that employer-sponsored health insurance is a major driving factor of the US healthcare system. The decline in the employer-sponsored health insurance has been identified to significantly influence the insurance coverage scheme of employees in the US. Hence, it has become an urgent need to examine the cost of providing employer-sponsored health insurance as a human resource practice in the US organizations (Kronborg et al., 2008; Flynn et al., 2006). . Rationale of the Research Effective of health and safety policies and practices in the workplace enables the healthcare workforce to perform their duties with utmost sincerity that would ensure the protection of service users and reduce risks. However, the spiraling healthcare cost and unemployment have adversely influenced the employees’ healthcare benefits scheme. Correspondingly, the research aims at exploring the cost of providing employer-sponsored health insurance as a human resource practice in the US organizations. The examination of the cost of providing employer-sponsored health insurance as a human resource practice is anticipated to provide significant insights regarding the current healthcare policies implemented by the federal government of the US such as Obama care plan. Besides, the study would also facilitate in understanding the reasons behind rise and fall in the employer-sponsored health insurance practice as well as the relationship between health insurance costs and labor market outcome. Thus, this study would provide rich insights necessary for comprehending about the numerous policies and practices in the US organizations as well as their related pros and cons (Flynn et al., 2006). Discussion of Finding In modern scenario, healthcare costs have been increasing at a rapid pace. To make the healthcare accessible for every individual, private health insurance companies have come up with new policies and schemes. Nowadays, to protect the people from different health problems, insurance companies have increased its premium rates to provide better coverage. As per the employee benefit plan, employees are required to be covered by employer-sponsored health insurance scheme. . However, due to rapid growth in healthcare costs and economic turmoil, employers have minimized this practice (Kronborg et al., 2008). In other words, it has been seen that employee health insurance premium cost has been fluctuating frequently over the past few years. Notably, employee health benefit plan is an effective way to improve productivity of labor market. Moreover, higher healthcare incentive generates more workforces in labor market. According to the research, 10% increase in health insurance premiums reduces the total productivity of employees and working hours by 2.4% (Baicker & Chandra, 2006). Therefore, higher health insurance premium often decreases total number of workforce in an organization. On the other side, steady insurance rate has been generating more amount of workforce in labor market. In order to balance the rate of insurance premium employers has been minimize total wage of workforce. In this regard, it can be affirmed that steady premium rate of insurance policy have a positive impact among labor market. Employee benefit plan is a profitable scheme for full time as well as part time workers. Due to increase in insurance premium rates, employers currently are hesitated to provide health insurance coverage to its part time workers. Due to hike in insurance premium employers evade from providing insurance coverage to full time employees. This kind of differences has been seen due to rapid increase in the healthcare premium rates. The constantly evolving medical technology has also led towards, rising healthcare costs. Thus, to comply with this changing trend, insurance sector has brought numerous alterations in the insurance policies.. In this regard, one of the major changes is witnessed in the form of increasing premium rates The consequence of increasing premium rates, has created a negative effect on employers ability to contribute towards their employees the health plan premium(Flynn & et. al., 2006). Moreover, in the past, the employer based insurance policies provided coverage for full-time and part-time employees as well as their families. However, in recent scenario, organizations are providing policies for its full-time employees only. For instance, recently, Wal-Mart has announced that it would cut down part-time employee health benefit plan, due to high increase of premium rate. In addition, the Wal-Mart authority will stop to provide coverage for those employees who work for less than 30 hours a week (Layne & Cavale, 2014; Kronborg et al., 2008). Furthermore, in order to reduce the gap between the rising healthcare cost and the access to quality care, federal government in the recent years has introduced the Affordable Care Act of 2010 (ACA) with the intention of bringing extensive modifications to the US health care system. The Act is perceived to have significant influence on the overall healthcare system of US. The implementation of the Act is accompanied with creation of new health insurance legislations that is perceived to influence premium rates and coverage of the people among others. State legislature during the years 2013 has considered over and above 2500 bills dealing to the Act since its implementation succeeded by 500 signed into law while there are still 1000 bills under consideration. The Act has also placed few rigid rules for an individual which mandate penalties for those American failing to obtain insurance coverage. Nevertheless, few prominent challenges such as attracting young and healthy people, improving consumer understanding about new rules as well as coverage opportunities accompanied with small penalties for non-engagement are perceive to create hurdles to enroll US people in coverage. In order to deal with these challenges both the federal government and states are implementing collection strategies to seek unprecedented level of enrolment and reduce barriers that have minimized the effectiveness of previous coverage efforts. Obama Care’s individual mandate requires that most of the American citizens to obtain health insurance by 2014 while failing to obtain health insurance are likely to seek tax penalty. Similarly from the employer mandate point of view employers are liable to a monthly levied penalty in case they are not able to provide health insurance minimum standards pertaining to “affordability” and “adequacy” set in Obama care (ACA). Although small business enterprises are exempted from such penalty but it has been ascertained that large business enterprises employing not less than 50 full time employees will have to bear the risk of penalty. Besides, it has been ascertained that employers are required to contribute not less than 50% of the health plan premium in order to avail the benefit of tax credit. Notably, tax credit is subject to income tax, thus employers having inadequate tax liability are not entitled to receive full current benefit. It has been further observed that the healthcare plan will lead to the higher cost of workers which will ultimately result firms to shrink output and at the same time the numbers of workers as well. At the same time, tax credit benefit is observed to be extremely small and the rules associated with the eligibility towards these benefits have been ascertained to be extremely complex (Obamacare Facts, n.d.; Vakkey, n.d.). Every employee considers insurance coverage as the most important benefit of their professional life. The employee benefit is known as attractive plan. Healthcare plan is an effective benefit, which increased employee retention, strengthens recruitment and lowering absenteeism. The increase rate of insurance policy has minimized the employee retention and maximized absenteeism. The high rate of insurance premium plan has also adverse impact on the labor market. It has been seen that increased rate of premium in insurance plan result in decrease amount of employee profitability. The relationship between higher premium rate and labor market is extremely complex. In this regard, to sustain in global market organizations has downsize its workforce to reduce extra premium rate. For that reason, part-time employees are casted-off from their jobs or which has increased the rate of unemployment within the nation. In addition, the growing rate of employment has further reduced the ability of the employees to meet the rising health care costs (Tabuchi, 2014; Kwon et al., 2013). Moreover, it has been ascertained that due to the rise in the insurance premium rates, employers are averting the practice of providing employer-sponsored health insurance. Correspondingly, the impact of declining providing employer-sponsored health insurance has created insecurity among employee population in the US. In addition, due to the rise in insurance premium, employee’s motivation level has been ascertained to be reducing and at the same time, there productivity has also been reduced (Layne & Cavale, 2014; Kwon et al., 2013; Flynn et al., 2006). Obama Care Health Insurance Exchange Marketplace Act is a very effective plan for part-time employees. This kind of healthcare insurance plan has generated a secure feeling between employee and its family. This policy has certain drawbacks which make it unsuccessful in labor market. This policy mainly benefits individuals working at different wage rate. Every employee, including both full part and part time are provided with similar facility. This policy is effective for part-time wage earners, but it is not effective for high wage earners. The government officials need to improve this plan and make effective for every individual and for its family member. The policy makers of Obama Care Health Insurance Exchange Marketplace have to expand its dimension and allow organizations to implement it for all-level employees. With the help of Obama care plan, organizations can easily provide higher coverage in a minimum premium rate. Employee healthcare plan can create a positive effect on employee work level with the effective use of Obama Care plan (Obamacare Facts, n.d.). Obama Care plan is an effective step by U.S. government, which makes the insurance policy market more improved than previous times. With the help of Obama Care plan, an individual can check its premium rate and coverage level. Moreover, Obama care plan gives a registrar identity to the insurance policy holders. This plan creates a positive as well as negative effect to its insurance policy holders. Obama care plan has restricted the employers to provide financial coverage its employees. Due to that reason, employees are not satisfied with insurance coverage level (Kronborg et al., 2008). In addition, higher premium of insurance policies reduced working hours of employees. To cut down extra expenses employers evading from providing insurance premium for part-time employees. Due to that reason, significant influence has been ascertained with respect to the level of employee motivation and satisfaction (Kwon et al., 2013). The rapid growth of healthcare cost has resulted in high premium rate, which has reduced the ability of the employees purchase insurance policies (Flynn et al., 2006). Recommendations Employee benefit plan are always an effective way to improve productivity and decreased retention of employee. New insurance policy and its coverage level help to improve employee interest about organization. Obama care plan is an effective step from United States. To make this plan more effective in future, authority of Obama Care plan have to implement it organizational level. With the help of Obama care plan, full-time employee from organizational level also is helpful. Obama care plan, provide better coverage in minimum premium rate. The policy makers of Obama care plan have to make its dimension wider; it will prove very helpful for every level employees and businesses. Thus, based on the above discussion of findings, it has been ascertained that generating new policies and programs has become important for ensuring the employee retention and their well-being (Kwon et al., 2013; Flynn et al., 2006). In the present world, need for food, shelter and financial support are extremely important. Besides these needs, healthcare is another important requirement for every individual. Insurance policy is an important part of healthcare. Health insurance policies support individual needs for living healthy life. The financial crisis and the economic downturn have significantly contributed towards increasing healthcare costs (Canan, 1994). Thus, to reduce the higher premium rate, healthcare industry needs to formulate and implement certain policies to balance the rising healthcare cost. In the recent years, due to sudden hike in healthcare cost, insurance companies need to reduce its premium amount. To make the insurance premium accessible for every employee, health care industry has to provide quality care in an affordable price. In this regard, with the collaboration of healthcare industry insurance company can design effective policies, which can provide better coverage in an affordable price (Canan, 1994). It has been anticipated that lack of insurance coverage will have negative impact on the overall economy (Dowling et al., 2008). Employee benefit is called is recognized as welfare service in organizational level. Every employer has to improve its welfare service to increase its future growth. With the help of welfare service organizations develop strong bonding with its employees. However, organizations have refused to provide insurance coverage as a result of this it will generating a negative affect among employee. Thus, employer has to think about alternative way for improving welfare service and attaining increased employee confidence (Dowling et al., 2008). Whenever there is a rise in the healthcare cost and premium price some of employees tend to continue with their existing policies. Thus, organizations are required to provide those employees with an additional benefit to continue their existing policy in future (Flynn et al., 2006). Employee benefit scheme is important part of organizational policy. To improve these policies, employers have to devise policies that meet the need of their employees as well as their family members. Nowadays, permanent and temporary both workforces are equally important to improve production level of an organisation. To maintain the workforce productivity employers have to implement health care insurance policies that can provide better coverage while reducing the risk arising from changing socio-economic conditions (Kwon et al., 2013). To make the employee benefit plan more attractive and easy, organisation have to redesign its policies such a way which can provide higher coverage to its employees. The increased contribution on the part of employers to their employees’ healthcare insurance plan motivates employees to render their dedicated efforts towards the accomplishment of the broad organizational goals and objectives. As a result of such employee benefit plan productivity and retention rate of workforce are improved. Part-time employee is another important element of organisation. During the peak season, organizations recruit part-time in addition to full-time labor force. For that reason, organizations have to design policies, which can provide and meet healthcare requirements of both part-time as well as full-time employees (Kwon et al., 2013). . To recreate the confidence of insurance policies among employee, private insurance companies have to make such policies, which can provide higher coverage in affordable premium. . It has also been observed that the healthcare plan may have significant impact on the employment generation by the firms. It is due to the reason that exemption of penalty based on the numbers of employees may possibly discouraged employers to add workers. Besides, other economic impact in the form of limited expansion of firms has been observed. Significant level of misunderstanding between the employers exempted from penalty and the employers liable to pay penalty may arise that may have considerable negative impact on the overall performance of the national economy. It has been ascertained that some employers may consider this healthcare plan to be ambiguous and discriminative (Lowry & Gravelle, 2014). To continue the welfare service for employee and their family members, organizations have to generate new policies, which can enhance organizational benefit along with betterment of its employees. Recently, Wal-Mart just announced it would be cutting health benefits for 30,000 part-timers in order to control its rising health care costs. This incident has raised insecurity among part-time employees. To remove this kind of insecurity from employee’s mind private insurance organizations need to improve their policies and programs and ensure security to them (Epling, 2014). However, decline in employer-sponsored health insurance has raised insecurity among part-time and full-time employees. Thus, employers and insurance companies have to redesign policies, to create adequate health security of the employees. To sustain in financial crisis every organisation have to more stable in employee retention part. To survive in global business employer has to more concern about employees need and interest. Moreover, insurance policy and its coverage is an ultimate need, which an employee expects from its organisation. Every organisation have to ensure better coverage for its employees, because increase coverage rate increase employee retention and productivity (Epling, 2014; Vakkey, n.d.). Conclusion In the contemporary world, employees are recognized as the one of the most important factors of production. The organizations are required to reveal their significant care and commitment towards its employees. Thus human resource policies within the organizations are required to incorporate policies that meet the mutual benefits of both the employees and the organizations. In the recent time, the issues regarding the employee benefits have significantly being attracted the attention of various organizations and the employers. In this regard, the growing healthcare costs and the recent recession faced by the US have ascertained to have radical impact on the employees insurance coverage. In order to acquire broad understanding the research was conducted. The research aimed at examining the impact of rising healthcare costs on individuals and families with employment-based private insurance. The research facilitated rich insights and knowledge regarding the issue. The above discussion it can be comprehended that increased rate of insurance premium has develop a positive as well as negative effect in labor market. To improve productivity and retention rate of employee, organizations has provide healthcare benefit. Due to economic pitfall employers are evading from to paying insurance coverage for employees. To make the productivity level of employee, employer has generated new source to compensate. Likewise, insurance companies also introduce policies, which provide better coverage in affordable premium rate. To make the employee benefit plan more useful in future organizations have to concern about insurance policies and its coverage. Obama care plan is a unique step by United States Government. To make this plan more successful in future authority has to collaborate with industrial sectors. Due to higher premium rate employers were identified to escaping from the practice of providing employer-sponsored health insurance. To balance the situation of decreased coverage rate, employers have to adjusting with its employees to increase productivity level in future. To survive in market, organizations have to go for compensate to its employees for better profitability. Due to that, organizations also spend capital to improve productivity of employee. To cut down extra expenses organizations refuse to pay premium. In future, it can assume that organizations have to compensate its employees in another way. In addition, with the help of Obama care plan, part-time employee can get coverage in an affordable price. Obama care plan is a unique solution for part-time employee to get coverage in a limited price. Increase premium rate affects labor market because, from the studies it has been recognized that higher premium rate reduced productivity and increased employee turnover. To reduce this rate organizations have to generate transparent policies, which provide better protection. 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