The battle to recruit and retain talent, coupled with a focus on heightened productivity, is causing many business owners to shift their views of providing employee health insurance benefits from a cost to an investment.
Today, employers recognize that offering health benefits can make the difference between retaining or losing an employment candidate and that keeping employees healthy will likely have a favorable impact on productivity and absenteeism. However, the variety of available options can make choosing a health insurance plan that is affordable and that meets employees’ needs a confusing and difficult process.
Each employer’s situation is unique, so there is no single “one-size-fits-all” approach that is best. The key to choosing the right health insurance plan is finding a solution that is affordable, reliable and is flexible enough to meet the needs of the participants. There are many different types of health insurance plans to consider.
Preferred Provider Organizations (PPOs) are the most widely adopted type of health insurance plan. PPOs have arrangements with doctors, hospitals and other providers who have agreed to accept negotiated fees from the insurer for their services. As a result, the cost sharing for participants who use PPO providers is usually lower. Employers can choose from a range of PPO options; from plans that cover many health care services to those that cover only urgent care and catastrophic illnesses. The cost of these plans varies depending on factors such as the number of employees, the type of coverage and deductible amounts for each type of plan.
The differences between Health Maintenance Organizations (HMOs), Point of Service (POS) plans and PPOs are increasingly becoming blurred. HMOs and POS plans originally were designed to provide benefits to members only through contracted doctors. No benefits were paid if the member chose to go to a health care provider outside the plan, effectively limiting the choice of health care providers. Today, however, many HMOs have migrated toward the PPO model in response to participant demands for more choice.
Additionally, insurers have responded to market forces driving increasing health care costs by developing new consumer-directed health plans, some of which combine a high-deductible health plan with a health savings account (HSA). The monthly premium for the high-deductible health plan is typically lower due to the higher deductible. These plans may be accompanied by tools and information that help the participants to take more control over their health and wellness, make informed choices about health-care services and potentially save money.
HSAs are tax advantaged savings accounts that the employee controls and uses to pay for qualified medical expenses. Any unspent money in the employee’s HSA accumulates for future years. Funds can be withdrawn from an HSA at any time, but taxes and penalties may be incurred for distributions not used to pay for qualified medical expenses. To establish an HSA, an individual must meet certain requirements, including having a high-deductible health insurance policy that meets federal requirements.
Here are a few areas to consider when making a determination on which plan is the best for your particular needs:
- Service: Look at the benefits offered by each plan. What services are limited or not covered? Is there a good match between what is provided and what you think your employees need? Does the insurer offer health and wellness tools and information to help employees make informed decisions?
- HSAs: Do you want a plan that can be paired with an HSA? These plans must meet certain requirements.
- Choice: What doctors, hospitals, and other medical providers are part of the plan? Having a larger network and the ability to choose providers makes it more convenient for employees.
- Costs: No health insurance plan will cover every expense. To get a true idea of the costs for each plan, you need to compare costs for premiums, plus other costs to employees such as deductibles, copayments and co-insurance.
- Quality: Check with the Department of Insurance for information on specific companies you maybe considering.
- Reputation and Reliability: Does the insurance company have a positive reputation and track record?
Today more than ever, there are numerous options for health care benefits. Each type of insurance plan has trade-offs, so it is important to compare carefully and match up the benefits that best meet your individual needs.