Health insurance is
expensive — who pays for it?
Most businesses that offer their employees Group Health
insurance plans contribute towards the cost of the coverage.
Some pay for all of the employees' premiums (for single
coverage) and let the employees pay the premium if they need
coverage for their families. Other businesses pay a percentage
of the total cost. The amount you choose to pay will depend on
your own situation. First, think about how your contribution
will affect your budget. Second, think about how it affects the
desirability of your plan to your present and future
employees. Many businesses choose to have their employees make a
contribution towards some of the cost, especially as health care
costs and insurance premiums continue to increase.
Managed care vs.
fee-for-service
There are two major types of health plans — managed care and
fee-for-service. The plan that's best for your business is
determined largely by your business location, the physicians and
hospitals available through the plan, the options offered by
insurance companies, and the constraints of your budget.
Managed care
These plans are agreements
between certain doctors, hospitals, and health care providers,
and are designed to offer a range of services to members at a
reduced cost.
They go by many names, such as Health Maintenance Organization (HMO) , Preferred Provider Organization (PPO) , Individual Practice Association (IPA) , or Point of Service (POS) plan.
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Most
HMOs minimize the
out-of-pocket expenses members pay for medical care, as long
as members use the HMO's preferred providers and facilities.
If members go outside of the network, they may be responsible
for paying the entire bill.
In addition, members must choose a primary care physician, and see that person first whenever they need medical attention. The primary care physician will make necessary referrals to specialists.
With HMOs, the per-visit or annual deductibles are usually lower than with other plans. -
PPOs usually
charge members slightly more than HMOs to use providers and
facilities outside of the PPO network, and do not require
referrals to see specialists.
PPOs are generally more flexible than HMOs but tend to cost members slightly more. The per-visit or annual deductibles are usually higher than with HMO plans. - POS plans are a combination of the features of HMOs and PPOs. With a POS, members choose whether they want to pay a flat fee for a network provider, or whether they want to pay a deductible and/or coinsurance charge to see an out-of-network provider.
Fee-for-service plans, also known as indemnity plans, allow your employees to choose health care providers themselves. This gives them a wide range of options that includes specialists such as cardiologists and surgeons.