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June 18 2019

Two Truths and a Lie: Employer-sponsored Health Insurance

by Kara Jones

Everyone loves the party game "two truths and a lie."

Can you spot the lie about employer-provided health insurance below?

A. Most people with private health insurance get it from their employer.

B. Most people with employer-provided health insurance today have a lot of choice in plans. 

C. Employees can buy insurance on their own and get reimbursed, tax-free, by employers.

  1. True

More than half of Americans with health insurance—180 million people—receive their coverage through an employer. (This is, in part, thanks to the tax exclusion on employer-sponsored health benefits, which subsidizes the employer-based system by excluding health insurance premiums from employees’ taxable income. Those who buy insurance themselves on the individual market do not currently get this generous tax break.)

This statistic may come as a surprise because over the last several years, most of the public discussion around health insurance has focused on the 20 million Americans who have gained coverage under Obamacare. But in fact, most people still get their coverage through work.

  1. Lie

About 80% of those with employer insurance have only one choice of plan. This leaves millions of employees with zero option to choose a health insurance plan that best meets their families’ specific needs.

Additionally, too many small businesses are finding it increasingly difficult to provide any sort of health benefits to their employees due to the rising cost of health care. The number of small firms offering health insurance dropped by 24% between 2012 and 2016.

  1. True!

C is true now, thanks to the recent Health Reimbursement Arrangement (HRA) rule out of the Trump Administration, which will empower employers to give their workers more choice of health plans. (An HRA is an employer-funded account that employees can use to pay for medical expenses and premiums.)

The new rule, set to go into effect on January 1, 2020, gives businesses the ability to give tax-preferred funds to employees so that they can choose their own coverage on the individual market. Roughly 800,000 employers are expected to take this up, benefitting 11 million employees and their family members. Almost 90% of these businesses will have fewer than 20 workers.

This means that employees with a qualifying HRA will now be able to shop around for a private health plan—tax free!—that is best tailored to their health care needs.





Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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