Who pays for employer-provided medical insurance? You, the employee, pay for it. It comes out of your wages. That is why you can make a case that its cost is a taxable wage-equivalent. Quoted in a fine piece on third-party medical insurance at Hennessey:
Employees ultimately pay for the health insurance that they get through their employer, no matter who writes the check to the insurance company. The view that we can get employers to shoulder the cost of providing health insurance stems from the misconception that employers pay for benefits out of a reservoir of profits. Regardless of a firm’s profits, valued benefits are paid primarily out of workers wages. While workers may not even be aware of the cost of their total health premium, employers make hiring and salary decisions based on the total cost of employment, including both wages and benefits such as health insurance, maternity leave, disability and retirement benefits. They provide health insurance not out of generosity of spirit, but as a way to attract workers – just like wages. When the cost of benefits rises, wages fall (or rise more slowly than they would have otherwise), leaving workers bearing the cost of their benefits in the form of lower wages.
