Once you’ve done the math to calculate your employee numbers, it’s time to learn about the different types of health insurance plans available to your business.
If you haven’t determined your employee count yet, you may want to review Part 2: How Much Does Health Insurance Cost? It’s not quite as simple as counting the number of people on your payroll, but we provide a formula and a calculator tool to make it easy.
PPO, or Preferred Provider Organization, plans give your employees the greatest flexibility in where they receive care. When a covered employee or dependent receives care from a “preferred” or “in network” provider, they receive in-network coverage. That’s the highest level of coverage with the lowest out-of-pocket cost. However, they can get care for a covered service from a provider not in the preferred network and still get coverage. It will be out-of-network coverage, and they will pay more out of their pocket than if they had received care from a network provider.
Most carriers include a nationwide network. Care from these providers is considered in-network and covered as such. This is a great benefit for people who travel outside the area and may need health care while away from home.
PPO plans can be a great choice for employees who want health care with fewer restrictions, but with more flexibility comes higher costs. The more budget-conscious may be willing to trade some of that flexibility for the lower cost of an HMO.
Members of an HMO, Health Maintenance Organization, receive coverage only for care received from in-network providers. Premiums are typically lower for HMO plans than PPO plans.
Carriers build different levels of flexibility into their HMO plans. For example, RMHP offers one HMO plan that gives members access to our statewide network of providers and another lower-priced HMO plan with a smaller, regional provider network .
Some employers like to give employees even more control over their health care expenses with a Health Savings Account, or HSA. To open an HSA, you’ll need to purchase a PPO or HMO plan that is defined by the IRS as a High Deductible Health Plan
An HSA is a tax-exempt account established specifically to pay qualified medical expenses. Employees can open an HSA account and contribute to it through pre-tax payroll deductions. Employers can also make tax deductible contributions to their employees’ HSAs, but check with your tax professional to be sure you’re following IRS rules. Employees own the contents of their HSA, including employer deposits, even after they leave employment. And they pay no federal income tax on those funds as long as they use them for qualified medical expenses.
Weighing factors of coverage, choice, and cost can be a complex process. One plan may not meet the needs of all your employees. In fact many employers offer more than one health plan. With RMHP you can offer up to three plan options if you have five or more enrolled employees. You may decide, for example, to offer a PPO, an HMO, and a high deductible plan with an HSA option. To offset your costs, you might consider contributing a portion of the premium for the lower-priced plan option. Employees who want richer coverage can select that coverage understanding they will contribute more toward the premium. RMHP or a broker can help you narrow down the choices to meet your needs.
Did this post spark questions? We’re here to help. Call our Employer Group Team at 800-453-2981, option 3.
In Part 4 of our group health insurance series, we discuss What Employers Need to Know About the ACA. Learn how this legislation impacts your health insurance obligations.
Have you missed any posts in our group health insurance series?
Part 5: Health Insurance: Looking Ahead