Health insurance is one of the most important benefits a company can offer to its employees. A good health insurance plan that balances quality and cost can help you attract and retain qualified employees. However, many small employers do not offer health insurance. Although high premium costs is often a major concern, it need not prevent you from insuring your employees. In today’s world, with managed care and the trend toward increased cost sharing with employees, health insurance is no longer an “all or nothing” proposition.
Assess Needs
If this is the first time you are considering offering health benefits, begin by meeting with your employees to discuss their needs. You may want to make it clear, up-front, that you may be unable to afford to meet all their needs and that they may have to share in the cost. But, by getting their input, you may be able to find an insurance plan that is appropriate for both your business and your employees.
Research Your Options
Basically, there are three types of health insurance plans:
Managed Care Plans. These plans generally restrict care to or offer financial incentives for using certain medical care providers and hospitals. Providers agree to limit their fees in exchange for a guaranteed number of patients. Providers generally handle all claims administration. Examples of managed care plans are health maintenance organizations (HMOs) and preferred provider organizations (PPOs). HMOs typically provide little, if any, coverage for services by medical professionals outside the organization. PPOs allow services to be provided out-of-network, but reimbursement rates are lower than for in-network providers.
Indemnity (or Fee-for-Service) Plans. These are the traditional health insurance plans. After paying a deductible, employees pay a percentage of the cost of health care services. Once the employee has paid a maximum out-of-pocket amount, the plan generally picks up 100% of all further costs. One advantage of indemnity plans is that employees are free to choose any doctor or hospital. Employees generally file their own claims for reimbursement. Some indemnity plans include cost-control features, such as pre-admission reviews of hospital stays, higher deductibles, and higher co-pays.
Self-Insurance Plans. Some businesses fund their own health insurance plans and contract with a third-party administrator to process the claims. This option may be appropriate for large companies with significant financial resources.
Choose Your Plan
A knowledgeable agent can provide you with several proposals and quotes so that you may determine which plan best meets your company’s needs. In evaluating proposals, consider the following questions:
- Is the insurer financially stable and reputable?
- Is plan administration easy or complex?
- How quickly are claims processed and paid?
- Does the insurer provide a toll-free number for employers and employees who have questions and concerns? If so, what are the hours of availability?
- Are all employee deductibles and penalties explained clearly?
- Does the plan provide adequate financial incentives to encourage employees to minimize costs without reducing quality of care?
- Will cost be determined via pooled loss history with similar businesses or your own business’s group experience?
- What about renewing the policy?
Once the health insurance program is in place, maintain an ongoing dialogue with the insurer and your agent to help ensure your company receives the best service possible. In today’s competitive business environment, a cost-effective health plan can provide an edge in recruiting and retaining employees.
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual or business owner.
This article was prepared by Liberty Publishing, Inc.
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