Group health insurance can be convenient and cost-effective for businesses in need of comprehensive health coverage. According to recent data published by the Kaiser Family Foundation, approximately 49 percent of the total population in the U.S. receive employer-sponsored health insurance.
With group health insurance, employee premiums are generally less expensive than with an individual health plan, and premiums are paid using pre-tax funds that help workers pay less on their taxes. Employers also pay lower payroll taxes and can deduct annual contributions.
However, not everything about group health insurance is cut-and-dried. Before choosing a group health insurance plan, ask the following important questions:
1. What Types of Group Health Insurance are Available?
Group health plans can differ significantly in terms of cost and coverage. There are several main types of group health insurance plans available, including:
HMO – A health maintenance organization (HMO) plan offers healthcare services through a network of healthcare providers that agree to provide services to members. HMO’s offer a variety of perks, such as lower premiums and out-of-pocket expenses.
PPO – A preferred provider organization (PPO) plan is one of the most popular options. It allows plan participants to visit any in-network physician or provider they would like without a referral. In addition, a portion of out-of-pocket claims may be covered by the insurance company.
EPO – An exclusive provider organization (EPO) plan enables plan participants to use doctors and hospitals within an EPO network. There are no out-of-network benefits, but members do have the freedom to see a specialist without a referral. The negotiated rates under an EPO plan are generally lower than with an HMO or PPO plan.
2. Will Group Health Insurance Save Money?
With the rapidly increasing costs of individual health plans, many employees find it more cost-effective to switch to a group health insurance plan offered by their employer. Group health insurance plans generally have a lower per-person cost than individual plans in terms of both premiums and deductibles.
There are several reasons why group health insurance is usually less costly, including employer contributions. Most employers cover at least half of the premium, making the premium cost for employees considerably lower. Premiums are also usually paid with pre-tax money, adding to significant savings.
Employers can enjoy certain tax savings when they deduct the amount paid towards employees’ premiums from their business taxes. In some cases, employers may receive special tax credits.
3. Are All Employees Covered by Group Health?
The answer to this question is different for everyone. Some employers may choose to offer group health insurance to all of their employees, while others only cover full-time employees. Who will be covered is dependent on how much the business can afford to pay towards these benefits.
When deciding how best to provide coverage to employees, consider the needs of the workers and how frequently they may need to visit a doctor or hospital. Consider sending a survey to all employees to see how many would be interested in having insurance.
4. Is the Plan’s Prescription Drug Coverage Sufficient?
According to the Health Policy Institute at Georgetown University, more than 131 million people, or approximately 66 percent of U.S. adults, use prescription drugs. The group health insurance plan is chosen must offer adequate coverage for prescription drug costs.
When reviewing this section of the plan, determine if the cost of prescriptions will be affordable and whether an employee requires approval from the health plan provider before filling a prescription.
Also, consider which pharmacies are in-network and if their locations are convenient. If certain prescriptions are not covered, think about alternative options.
5. Will Family Members Be Covered by the Plan?
Many employees rely on group health insurance to provide coverage for their spouses and children. Employers must consider if the plan they are choosing extends to an employee’s dependents, and if so, how much coverage is available for family members.
When deciding whether to choose a plan that covers dependents, employers should consider the age of their employees. If the business hires mostly very young adults without children or older adults with grown children, then a insurance plan that covers dependents may not be a necessary expense.
Speak with an Experienced Benefits Consulting Firm
Choosing the right insurance plan for a business and its employees is paramount to ensure that workers remain healthy and content with their benefit offerings. Do not hesitate to ask plenty of questions about plan options before making a decision.
To learn more about the different types of insurance plans available or speak with an experienced benefits consulting firm, contact New City Insurance’s employee benefits professionals.