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Health insurance is a method for an individual to insure himself or herself against the risk of future medical expenses. From the employer-employee perspective, a group health insurance plan is an employee welfare benefit plan established or maintained by the employer to provide medical care for the employees or their dependents directly or through insurance, reimbursement, or otherwise. In general, employer-sponsored health insurance plans usually come with some attached conditions, such as a waiting period before benefits take effect for new employees, that the employee be full time or work a specified number of hours per week, and that employees pay a portion of the premium.

In America, most of the employees and their dependents are covered by the employer-sponsored health insurance plans, with the remaining insured through public programmes like Medicaid or private insurance, or are uninsured. Small organisations, especially those with mostly low-wage employees, are less inclined to offer health insurance as the small workforce translates into a larger cost of underwriting and administering coverage, while also raising the cost of the premium. Moreover, many employees in such organisations also prefer compensation in the form of higher wages than health insurance benefits.

Although most employers are not legally required to offer health insurance benefits to their employees, once it is provided, the employer must comply with a number of federal anti-discrimination laws and health plan regulations. Employers have also found that one way to reduce health insurance costs is to provide employees with preventive health screening programs and/or wellness programs in order to encourage them to lead healthier lifestyles.