Group health insurance is critical to protect and support the health and well-being of employees. It also plays a key role in employee recruitment and retention. According to a survey published by the Society of Human Resource Management (SHRM), 56 percent of U.S. adults with employer-sponsored health benefits reported that whether or not they like their health insurance coverage is a major factor in deciding whether to stay at their current job.
When shopping for group health insurance for a business, it is important to compare all options and make a decision that meets the company’s objectives and budget. Keep in mind that the Affordable Care Act (ACA) has transformed the group health insurance market and many new rules and regulations have been established in recent years. Consider the following information and tips when acquiring a group health insurance plan.
Do Not Overlook HSA-Qualified Plans
Buyers of group health insurance often overlook the benefits of health savings accounts (HSAs) and qualified high-deductible health plans (HDHPs). Here is a closer look at these two plans, how they work, and why a business may want to consider adding them to their employee benefits package.
A health savings account is a type of individually owned account that employees can use to pay for current or future health expenses. This tax-advantaged plan works similarly to a retirement account as the funds can be kept as cash or invested in mutual funds. Both employers and employees have the option of contributing to the account.
Contributions made to an HSA via payroll deduction are generally made pretax, which can reduce an employee’s taxable income. Any distributions made from an HSA to pay for qualified medical costs, as well as earnings to an HSA from investments and interest, are also tax-free.
A high-deductible health plan is a type of health insurance plan with high deductibles and low premiums. HDHPs also tend to have higher out-of-pocket maximums than most traditional health insurance plans. It is tempting for many businesses to avoid HDHPs in favor of a low deductible plan that minimizes out-of-pocket expenses for employees.
However, many employers ultimately make the move to a high-deductible health plan coupled with a health savings account as they become familiar with the level of risk. Many employers have realized that an HDHP provides protection from catastrophic claims and preventative care is still covered at 100 percent.
A combination HSA and HDHP can also be advantageous to businesses with a younger or relatively healthy workforce. When employee health care spending is consistently low, many employers find that they could be saving on premiums while also helping employees save for future medical costs with an HSA.
Other Things To Consider When Acquiring Group Health Insurance
There are also other things that businesses should consider when shopping for group health insurance. Prior to the introduction of the ACA, health insurance rates were calculated based on the age ranges of employees within a workforce.
Employers would simply need to provide the insurance company with the approximate age range of their employees and would receive a health insurance quote. Today, rates are calculated based on more complex factors. Employers must provide the exact birth date of each employee, as well as spouses and dependents, before receiving an accurate quote.
Networks are also changing, making it more challenging for employees to find a health professional or stay with their current provider. Many group health plans are gradually reducing the size of their networks as a way to cut insurance costs. Employees may be unhappy that they will no longer be able to see their doctor or have to change doctors to one in the network.
Changes have also been made to prescription drug coverage under many group health insurance plans. Prescription drugs are classified into several tiers based on cost, the availability of generic versions, and how the cost compares to similar drugs.
Employees must pay more for prescription drugs on higher tiers when filling a prescription. These higher tiers generally include brand-name drugs that do not have a generic alternative. When choosing group health insurance, review the drug tiers and determine how much employees would need to pay out-of-pocket.
Learn More About Group Health Insurance
Making the decision to offer health insurance coverage to employees is a major commitment that can provide tremendous value for growing businesses in the long-term. However, choosing the right group health insurance policy is not always easy.
Working with an experienced employee benefits consulting firm that specializes in insurance and benefits consulting can help ensure that employees get the benefits they need while businesses gain access to tax advantages and other benefits. For more information about things to consider when acquiring group health insurance, contact an employee benefits consultant at New City Insurance today.