Selecting a health plan is a significant decision for employers of all sizes, new and established. It’s also a decision with numerous nuances and choices. While you want the best for your staff, there are costs to consider. Whether you are offering group health coverage for the first time as a new company or switching health plans, here’s what to look for when shopping.
Fully Insured or Self-Funded Plans
Your health plan’s cost can greatly impact the plan type you choose. If your group health insurance is fully insured, you purchase health insurance from an insurer. Most small to medium companies choose a fully insured plan because it limits risk and offers the most cost predictability. In contrast, you develop and operate your health plan with a self-funded plan, usually with the help of a third-party administrator.
However, a self-insured plan’s financial risks are more significant, and costs are less predictable than a fully insured plan. In addition, some prominent organizations pick this approach since it saves money and they can tolerate the additional risk.
Network Size & Structure
Your group health insurance’s network size will impact how many choices your employees have in choosing their care and how much are the out-of-pocket fees. Additionally, some plans provide “preferred” providers like hospitals, doctors, and specialty care. Members receive the most coverage and pay less out-of-pocket when they see preferred providers.
Also, other plans provide a broader network of providers – members can choose from more hospitals and doctors. But they must pick a primary care doctor (PCP). Plus, their out-of-pocket costs are higher for specialty and out-of-network care unless their primary doctor provides them with a referral.
Plans with FSA, HSA, and HRA Options
Flexible spending accounts (FSAs) and health savings accounts (HSAs) are not insurance plans but rather tax-advantaged savings accounts that assist employees in paying for health care expenses. They both allow employees to set aside pretax money from their paychecks to cover eligible medical costs. In addition, the funds roll over yearly with HSAs, and with FSAs, the funds must usually be spent yearly, or they will be lost.
Lastly, health reimbursement arrangements (HRAs) are employer-funded health plans. Your employees will submit out-of-pocket medical expenses like copays, coinsurance, and deductibles to their employer’s HRA for tax-free reimbursement.
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