Health care coverage is one of the most important issues in America today. Medical costs are on the rise and health insurance is critical to a person’s financial and physical health.
Did you know that nearly 75 percent of Americans obtain health insurance from their employer? Employers are able to pool a large number of employees into group insurance plans. The result of a large group is lower annual premiums.
The fact is that employers take great interest in the health of their employees. Healthy employees are naturally more satisfied and productive.
Read on to learn more about selecting the best employee health insurance. Explore tips for finding an insurance plan that keeps your employees happy and healthy.
Affordable Care Act (ACA)
Before diving into the selection process, it is important to understand the regulations established by the ACA. The ACA, commonly referred to as Obamacare, sets minimum thresholds for the quality of healthcare coverage.
For starters, any business with more than 50 full-time employees must provide health coverage. Verification of coverage is shared with annually with the Internal Revenue Service (IRS).
If a business does not provide sufficient health coverage to its employees, the IRS may issue a fine. Small businesses can seek assistance through the Small Business Health Options Program (SHOP).
SHOP offers health insurance plans that meet the ACA’s standards. In addition, your company may qualify for a tax credit by enrolling in SHOP.
HMOs vs. PPOs
The first decision you will need to make is whether to offer HMO or PPO plans.
Under an HMO, or Health Maintenance Organization, you are required to use providers that are in-network. HMOs are generally cheaper because of this restriction. Also, HMOs require physician referrals to authorize treatment or see a professional.
On the other hand, Preferred Provider Organizations (PPOs) give the patient more flexibility. Your employees will still receive out-of-network coverage, albeit at a higher coinsurance rate. The rules are far more flexible for seeing a specialist or getting a procedure.
Employee Health Insurance Shopping List
There is a list of factors that employers should consider when shopping for employee health insurance. Read more here about these factors so you can make an informed decision.
The first thing employees want to know is how much money is deducted out of their paycheck. This payroll deduction is referred to as a health care premium. In most cases, premiums are deducted on a biweekly or monthly basis.
The deduction takes place before state and federal taxes are applied. Because it affects their take-home pay, employees are generally looking for plans with a low monthly premium.
Truth is that employees are making a major mistake by focusing on monthly premiums. You may find employee health insurance with cheap premiums that provide poor coverage.
It is the employer’s responsibility to prevent this from happening. The first thing to look for is a plan with low deductibles.
One of the most significant issues with the American health insurance market is increasingly high deductibles. In fact, 26 percent of Americans have health insurance with deductibles over $2,000 per year. Last year, the average deductible increased to $1,808, an increase of 7 percent.
Many shoppers do not understand how deductibles work. Basically, your insurance does not fully kick in until you reach the deductible level.
Each time you go to the doctor, the amount you pay out-of-pocket contributes to the deductible level. Health benefits like coinsurance begin once you meet or exceed the deductible level. The only benefit that your employee receives is paying the negotiated rate between provider and insurance company.
Healthy employees, especially younger ones, may never reach a deductible threshold in the thousands. To find the best employee health insurance, make sure to select a plan with low deductibles.
Annual Out-of-Pocket Maximum
Another thing to look for is the annual out-of-pocket maximum. This is a threshold that limits the amount your employee can pay out-of-pocket each year.
Most importantly, it provides your employee with greater coverage in the event of a catastrophic health condition. For example, consider one of your employees is in a serious car accident or survives a major cardiac event. The medical bills are certain to be astronomical.
The out-of-pocket maximum insures against the possibility. Finding a competitive out-of-pocket maximum level is imperative when shopping for employee health insurance.
In addition to the premium, copays are another item that employees are generally aware of. A copay is the upfront amount that an employee pays at a doctor visit.
The copay amount varies depending on whether the doctor is a primary care physician or a specialist. Typically, the copay amount is higher for a specialist. Employees are cognizant of copay amounts because it comes out-of-pocket each visit regardless of deductible.
The next thing to evaluate is coinsurance. This is the percentage of the claim that the insurance company covers.
Coinsurance is basically a cost-sharing mechanism between the employee and the insurance company. As the employer, you want to look at what coinsurance percentage your employees are responsible for.
According to studies, the average coinsurance rate is 20 percent. What this means is that the insured person is responsible for 20 percent of the bill. It is important to remember that coinsurance only starts after your employee reaches the annual deductible level.
Another factor to consider is the plan’s policy on prescription drugs. You should review each prospective plan to see what percentage of the prescription is covered.
Each plan has a different pay share for brand name and generic drugs. Also, find out what the annual maximum is for prescription drug purchases. Some employees that are on regular medication may need a higher maximum.
Wrapping It Up
Shopping for insurance plans is complicated. As an employer, your job is to find the best value for your employees and the bottom line.
The recommendation is to carefully weigh factors like coinsurance and deductible levels. Look at each important element and decide on what the best overall plan is. If you enjoyed this article about employee health insurance, check out our blog for other great business articles.