With the Affordable Care Act still in place for now, businesses and employees are thinking about choosing health insurance for the coming year. As of right now, in a company with 50 or less employees, the owner needs to decide whether to provide insurance for their team or let them secure it individually on the federal or state exchanges. (Self-insuring employees is also an option business owners are exploring.)
The decision has become more complex in recent years, and may become even more so as Americans wait to see what parts of the Affordable Care Act may be overturned in 2017. But if you're choosing health insurance plans for your company, the following questions are still applicable.
Will the company offer any health insurance to their employees?
This is a big financial consideration but also one that team members value. The company can either sponsor a health insurance plan or provide a set dollar contribution for each employee when they secure their own.
It is becoming increasingly expensive for individuals to get insurance on the exchanges, so it can be more beneficial for employees to get insurance through their employer. Many employees see this company contribution as a compensation issue: If the company does not provide insurance, they are legally obligated to secure their own. For now, the employer can either go directly to an insurance agent or broker, or use the federal government's SHOP Marketplace. It is common for companies to offer a health insurance plan to their team even if they do not contribute to the premiums.
When choosing health insurance, how much of the cost will the company cover?
For most employees, gone are the days where the company covers 100 percent of the insurance cost for them and their families.
With health costs rising, many of my clients cover a minimum of 50 percent of the premium for the employee and 0 percent for the family. When choosing health insurance plans, it is important to add this to the total cost of compensation for all employees to determine what the company can afford and remain profitable. Different employee populations will value this benefit in a variety of ways so consider getting direct feedback from the team.
What types of plans should be offered?
Most insurance companies make it easy to offer a variety of HMO, PPO, EPO and POS plans to employees with various coverages including prescriptions and a health savings account.
Some insurance companies make it simple for businesses and their team to select the insurance coverage that best fits their needs and budget. Employees will want to check to see if their doctors are in the plan they choose to lower their out of network costs.
Who will explain all this to the employees?
Health insurance policies have become very complex to understand. You may not want the management team to be the one explaining it to employees. The premium is now only one of the components to consider when examining the total cost. While every plan can be different, most now can include the following health insurance terms to familiarize yourself with:
Deductible: This is the amount the employee must pay before the selected health insurance plan begins to cover medical expenses in a calendar year. Typically there are individual and family deductibles that must be met first.
Coinsurance: Once the deductible is completed, this is how the costs will be shared between the employee and the insurance company. For example, the individual might pay 25 percent and the insurance plan 75 percent. Plans typically have bronze, silver, gold and platinum plans that have different coinsurance rates. Premiums are usually lower where an individual pays a higher percentage of coinsurance like in the bronze plans.
Copayment: This is the amount that the employee pays each time they get a prescription or visit the doctor. This does not usually count toward the deductible.
Out-of-pocket maximum: This is the most any individual will pay for all medical expenses in a calendar year before insurance covers 100 percent of the cost. This may differ based on if the expenses are in or out of the insurance network.
Overall, you can decide how much the company can afford for health insurance as part of their total compensation package and hit their profitability targets. Talk to employees to see the value of this benefit. Finally, it is generally a good idea to offer them as many choices as possible that fit their individual medical and financial needs. This is only a general summary and will not apply to every company. Consult your insurance company or insurance specialist to understand what each part of the plan means to the company and their employees.
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