Group Health

The Need

Own a business? Then you know how hard it is to find and retain talented individuals. Offering your employees a comprehensive health plan is one step in attracting and retaining good employees.

Furthermore,  providing group health for your employees and yourself mitigates the risk of financial hardship should someone need a serious medical procedure.

Below are the typical cost for some medical procedures:

  • Open Heart Surgery – $324,000
  • Repairing Rotator Cuff – $40,000
  • Broken Arm – $12,000
  • Broken Leg – $20,000
  • See More For Yourself At Cost Helper

What health insurance does is protect you from unlimited loss in the event something catastrophic occurs. Instead of paying $20,000 for a broken leg, you end up limiting your loss to maybe $2,000 (depending on your plan). The trade off is that you pay a monthly premium to the insurance company to cover the risk.

 

How It Works

What’s The Same

Group health works just like individual health policies. So let’s use our previous example to recap:

Let’s pretend John has a family and they have the following plan:

  • Deductible (Embedded) –  $1000/$2000 (Individual/Family)
  • Co-Insurance – 80/20
  • Max Out Of Pocket – $2,000

John thought it would be a great idea to go skiing, but ended up breaking his leg. Now he is looking at a $20,000 procedure.

  • Deductible – This is the amount that you will pay 100% of before Co-Insurance will start to take over. The one caveat is whether you have an embedded or aggregate deductible. An embedded deductible means that if a person is paying for a procedure and are on a family plan, that person will only pay the individual deductible before co-insurance will take over. So in this case John will only pay $1,000. If he had an aggregate deductible, he would have to pay the whole $2,000 before he meets his deductible requirements.
  • Co-Insurance – Co-Insurance is usually defined by a percentage split. In this case, it is 80/20. This means that the insurance company will pay 80% of the costs and you will pay %20 of the costs after the deductible is met. Co-Insurance will be in effect until you hit the Max Out Of Pocket amount. The max out of pocket amount typically does not include the deductible, but make sure to check with your agent as each carrier may treat it differently. In this example, John will pay $2,000 and the insurance company will pay $8,000 for the Co-Insurance.
  • Payments Against Claim –The total paid towards the medical claim is now:

Deductible + Insurance Part of Coinsurance + John’s Part of Coinsurance = $ 1,000 + $8,000 + $2,000 = $11,000.

But wait…what happens to the remaining $20,000-$11,000 = $9,000 of the costs…well the insurance company will pay the rest. So for the $20,000 procedure, John only has to pay $3000 and the insurance company will pay $17,000.

Click Here – For another illustration of how your plan works.

 

What’s Not The Same

There are a few criteria that need to be met on group policies and differences from an individual policy. Here is a short summary:

  • Minimum Participation -Group plans require a minimum number of eligible employees to participate in the plan. This number can vary from 50% to 75% of eligible employees depending on the carrier. Most carriers will not hold it against your participation numbers if an employee waives because they are covered by their spouse.
  • Employer and Employee Contribution – It varies from carrier to carrier, but most carriers require the employer to pay a minimum portion of the costs of the insurance. Typically this amount is around 50% for individuals and 25% for families.
  • Underwriting – For a group plan no one can be denied. In an individual or family plan, a person can be denied based on health underwriting (This will no longer be the case in 2014 due to the Affordable Care Act).

 

The Options

  • Health Savings Account – HSA plans typically only have a deductible that can range anywhere from $1,500 to $10,000 depending on the plan. This means you will pay 100% of the cost of care and drugs until you hit the deductible, but once you hit it you are done paying for that year. These plan are a great option for people who are healthy and are only looking for coverage in the case of a catastrophic illness. Furthermore, you can contribute into your health savings account with pre-tax dollars, which helps reduce your taxable income. For 2013 the maximum individual contribution into an HSA is $3,250 and for a family it is $6,450. Employers can contribute into an employees HSA.
  • Preferred Provider Organization (PPO) Plan -These are the plans that most people think about when they think of health insurance. These plans typically have a deductible, co-insurance, out of pocket max, and co-pays. These plans are typically very comprehensive and the co-pays are great for a person who has frequent doctor visits or are on a lot of medication, which would make paying 100% of the costs with an HSA too expensive. Furthermore, you have a wide selection of in network doctors to choose from. You also have the choice to use out of network doctors, but the costs are usually higher and the insurance carrier may not pay as much for procedures. The only drawback to a PPO plan is that the plan typically has the highest premiums.
  • Health Maintenance Organizations (HMO) – These plans typically limit you to using doctors and facilities that are part of the HMO network. Typically these plans include the same components as a PPO plan. In some cases, the premiums of the HMO can be more competitive than that of a PPO plan because of the efficiencies that come with the HMO structure.

 

Next Steps

If you are interested in speaking with one of our agents, feel free to Contact Us.

One Comment

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  1. Christina VanSickle October 27, 2013 at 11:36 am #

    We have a small business and I am looking for the best group rates. I also have some questions concerning benefits that we can offer. If you could please call me when you can my number is 330-240-4834. If for some reason you get my voice mail, I will return call immediately.
    Thank you
    Christina VanSickle

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