Group Insurance

With fully-insured plans the insurance company takes on the risks involved with healthcare costs and charges your business an annual premium for the benefits in the insurance policy. Premiums can be partially paid for by employees.

The insurer uses a variety of factors used to calculate group health insurance premiums, including:

• Size and health of the group
• Average age of the group
• The employer’s claims history
• Types of occupation
• Level of coverage and add-on benefits

In a self-funded or self-insured plan, your business assumes the financial risk for providing health care benefits to its employees. By doing this you typically have a much lower cost to your plan and more control. However, your business will take on the risk of having to pay for any catastrophic claims.

This path is a great option for large businesses, but small businesses can also take advantage of self-funded plans. Small businesses can opt for a partially self-funded plan with stop-loss insurance. This option limits your risk so that you can still reap some of the benefits of self-funding without taking on the entire burden of catastrophic claims.

Unlike traditional plans with annual premiums, level-funded plans are based on a monthly payment rate. Insurance carriers will use census information to determine the amount your small group should pay. This rate is based on factors like claims allowances, fees, and stop-loss coverage premiums. Once the year is finished, the carrier will adjust the monthly level based on group performance and return unused claim money.

An HMO is a type of group coverage where group members pay for specific health services through monthly premiums. In HMO plans members have access to a network of healthcare providers and locations, but services can be limited to only providers that have contracts within that network. This arrangement allows HMOs to be more affordable than other types of health insurance plans. Seeing out-of-network providers in non-emergent situations typically will come at a higher out of pocket cost to the member.

PPO plans are like HMO plans, except with more flexibility. PPOs feature a network of healthcare providers and facilities like HMOs. However, members in PPO plans have the flexibility to see physicians or locations outside of the network. Typically, these visits will result in modestly higher cost sharing amounts.

HDHPs have lower premiums and higher deductibles for group members. This means employers and members will pay lower monthly premiums however, the group member will have to pay more out-of-pocket before the plan benefits start paying for services.

HDHPs can be paired with savings options like a health savings account (HSA). These accounts allow members to make tax-free contributions that then can be used to pay for qualified medical expenses. Health reimbursement accounts (HRAs) are another savings option that can be tied to an HDHP. These accounts are similar to HSAs, except employers make the contributions instead of employees.