For majority of employees, health coverage is the most important employee benefit. It is a lucrative benefit for an employer to offer, since the cost is tax deductible, and surveys have shown that providing health insurance is good for increasing retention, bettering recruitment and attitude, and lowering absenteeism. However, not all insurance plans are an equally good bargain for a business. Below are some guidelines for choosing a health plan that will work well for your company.
What type of health insurance should a company offer?
Traditional health insurance is the typical choice of almost all small businesses. The biggest advantage offered is the flexibility it offers to employees, letting them to visit any doctor or hospital. However, it is sometimes more expensive to offer than managed care plans. Some managed care plans offer a "fee for service" option that mimics the freedom of traditional insurance. Although it allows greater choice, the co-pays and deductibles that employees pay can be very high. Before looking for an insurance broker or evaluating plans yourself, you should think about what your business wants in an insurance plan and create a list. The list may also include such desires as dental, mental health, or maternity coverage, and whether your company may want to provide insurance for employees' dependents.
Should a business seek the help of an insurance broker?
Small businesses usually purchase group health plans from a broker. Brokers generally offer plans after consulting from five to fifteen insurers, and aids a lot in comparison shopping. When choosing a broker, it is often preferable to choose one that has expertise in dealing with businesses of a similar type and in the similar industry as yours.
Receiving a recommendation for a sincere broker can also be important. Not all brokers are ethical. Some brokers also may offer a computerized search that apparently compares all policies on the market, but which is manipulated to recommend only those that the broker sells.
Searching a better insurance deal: If your business has difficulty finding economical coverage directly from insurers, you may want to get in touch with your state department of insurance to know about small business group health providers in their area. Small businesses also can connect with an association that offers group benefits for their members. However, before taking advantage of any such plans, your business should scrutinize them as keenly as any other plan it might evaluate.
Evaluating a policy:
Go through the list of policy criteria you created. A plan should meet those goals as closely as possible.
Cost: The next step is to look at cost — to the employees as well as to the company. Observe the cost of the plan, the deductibles, and co-insurance costs. How much part of the plan will the company be able to pay for. If it can't pay for the entire cost, how much will the employees have to contribute? Is it comparable with their salaries? For example, some companies provide health insurance at rates that are completely out of line with their employees' means. For example, an employer may not offer an employee insurance if the employee must pay 100 per cent of a $250 per month policy on take-home salary of $1200 per month. Also, the employer must calculate whether deductibles and co-insurance are more than what an employee can afford on his or her salary. An employer should be cautious of any plan that requires employees to pay for more than 25 per cent of treatment costs, or which charges co-insurance for medical expenses in excess of $10,000.
Coverage: Next, the employer must necessarily read the fine print about the types of conditions covered. Some policies will limit coverage to some particular conditions, or cover them only up to an insanely low maximum payment. Coverage for long-term illness and pre-existing conditions are areas where these low limits are mostly observed. The total coverage for the policy should be minimum $1 million, since costs for treating serious illnesses can easily reach this amount.
Employers should be utmost clear of hospital indemnity policies and dread disease policies. Hospital indemnity policies pay a certain amount for each day the employee is in the hospital, generally at a level not enough to cover the typical daily cost of a hospital stay. Dread disease policies cover particular illnesses, but turn out to be lot more expensive than is warranted by the probability of contracting one of these diseases. They also are totally inadequate to fulfill the needs for general coverage.
Reimbursement: Similarly, verifying reimbursement levels for various procedures can disclose whether coverage is far less than the average hospital or doctor charge. Employees going through these procedures will be left owing great sums if this is the case. If suspicious, check with a physician to see whether certain coverage amounts are reasonable.
Restrictions: Are there conditions that do not fit with the business's operations? For example, one common restriction among HMOs is exceptionally reduced coverage or no coverage if an employee has to seek medical or hospital care in another state. If your business's employees travel frequently, such a policy would be inappropriate.
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