Many responsible employers, regardless of business size, offer group health insurance plans as part of their employees’ compensation package. This provides uniform benefits for the employees and their beneficiaries so that they can afford medical care when they need it.
To be eligible for group health insurance policies, a company must have at least two employees. Though not all insurance companies offer the same group health insurance packages, it helps to understand some of the basic facts on the most common types of plans.
Health Maintenance Organization (HMO) Plan
An HMO is a prepaid health plan wherein the policyholders are paying in advance, through monthly premiums, for specific types of health services. Though this plan is comparatively less expensive than some of the other options, the medical services available can be limited because an employee can only receive medical assistance from certain facilities listed in the HMO or policy guidelines.
Small Employer Group Plan
Usually purchased by employers with less than 100 employees, this plan offers the standard coverage for primary healthcare, physical examinations, and laboratory work. It also includes annual claims benefits and is usually lumped with other small-employer group packages in the same industry to keep the policy’s premium rates relatively low and affordable.
Fully Insured Employer Group Plan
Under this policy, the employer pays a fixed amount for the annual premium rate while the insurance provider shoulders the costs related to the benefits stated in the purchased policy. The employees can also contribute in paying the premium. However, their contributions can fluctuate, depending on the number of the total participants in the group coverage.
Self-Funded Health Care
In direct contrast to a fully insured plan, a self-funded insurance coverage requires the company to pay all the health care costs and other benefits of its employees, plus the resulting administrative costs of a self-funded plan, out of its own pocket. This plan was traditionally purchased by big companies with large sources of income or funds, however now partially self-funded plans are becoming more popular among employers down to 200 employees.
Preferred Provider Organization (PPO)
Unlike HMO, PPO offers a more flexible plan. Policy holders are welcome to choose their own doctor or medical facility to visit, whether or not they are on the preferred list. However, the co-payments will be significantly higher than if the employee chooses a provider from the preferred list.
Largely, employer insurance is regulated by the governing state. However, the implementation of the Affordable Care Act (ACA) also casts the federal government as a regulator. Therefore, the determination of how much the premium rates are going to cost and what type of benefits come with the chosen package may vary from state to state.
To learn more about group health insurance plans, contact a benefits broker or health insurance agency. They can give you a detailed list of the pros and cons between the different types of group health insurance packages, and give advice on which plan is best for your employees.
Group Coverage Basics, HealthCoverageGuide.org
Consumer Guide to Group Health Insurance, NationalAssociationofHealthUnderwriters.org