BENEFITS

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Primary Types of Health Insurance

QUICK SUMMARY

If you’re investigating health insurance plans for your employees, it won’t take you long to discover that there are a dizzying number of choices out there. And there’s even more information to digest after the passage of the Affordable Care Act. What follows is an overview of some of the options available to help you begin your exploration of health insurance plans.

Fee for Service

Fee for Service plans offer the widest network of doctors and hospitals compared to other types of plans, which limit access to some providers. They’re also generally the most expensive in terms of premiums, copayments, and coinsurance.

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Managed Care

Managed Care is a way for health insurers to help control costs by managing the healthcare services people use. Today, nearly all health insurance plans include a managed care component to control costs. One such component is pre-authorization: Members may need to receive approval from the insurance company before being admitted to a hospital or having a major procedure.

Over the years, managed care has given birth to several types of health plans, all in an effort to balance quality care with lower costs. Here are a few of the prevalent ones you’ll encounter:

Preferred Provider Organizations (PPO) plans are similar to Fee For Service, with one wrinkle: They use a network of contracted medical “preferred providers” (doctors, hospitals, etc.). When members see doctors in the PPO network, they present a card and don’t have to fill out and submit claim forms. PPO members can visit any provider they choose without a referral—even doctors, specialists and hospitals outside the network. However, they will pay more for services outside the network than they would have if they use in-network providers.

Point of Service (POS) plans revolve around a “primary care physician” who makes referrals to specialists as needed. Members who see providers in the POS plan network generally pay a small fraction of the service fee. Members can see providers outside the plan network only if they receive a referral from their primary care physician, plus they’ll generally pay a much larger percentage of the cost for out-of-network provider services.

Health Maintenance Organizations (HMO) plans are generally less expensive (lower premiums, copayments, and deductibles), and member costs are more predictable than with other types of plans. But they also offer the least amount of choice within their network of doctors, hospitals, and other providers. And HMOs offer no coverage to members who seek providers outside the network. (Exceptions may be made in emergencies or when necessary for other medical reasons.) Additionally, the smaller network can mean that members may have to wait longer for a doctor’s appointment.

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High-Deductible Health Plans: A Way to Save on Taxes

High-Deductible Health Plans (HDHPs) typically feature lower premiums and higher deductibles than traditional insurance plans. Their big advantage, though, is that members can set up a Health Savings Account (HSA) that allows them to contribute up to $3,450 for individual coverage plans and up to $6,900 for family coverage plans to cover medical expenses.

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Outsourcing Administration of Health Insurance

Today’s health insurance environment for small businesses is a complex equation. To sift through the options, and to help ensure they’re making the right decision, many small businesses turn to experts for help and outsource the selection, management, and administration of their health insurance plan.

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