Group health insurance programs can be segmented into a number of different ways. The most basic distinction is by the size of the group. If an organization employs less than 50 full time employees, it is generally considered a small group. If an employer employs more than 50 employees, it is generally considered a large group.
- Small Group Health Insurance: (Group with between 1-50 employees) Insurance carriers must issue a quote on a small group. In the post-health care reform era, employees are “community rated” which means that their insurance rates are only based on age, geographic location, and tobacco use status.
- Large Group Health Insurance: (Groups with over 50 employees) Insurance carriers are not required to issue a quote or provide insurance to a large group. Quotes are primarily based on a group’s prior health history and demographics as a whole. Generally, the group also has the ability to customize language in their health insurance contract to design a plan to fit their liking or requirements.
Group health insurance plans are often times also classified by which party holds the insuring risk. Below are three types of group health insurance contracts with varying risk.
- Fully Insured Health Insurance Contract: This is a contract in which the carrier holds all the insuring risk. The employer pays a monthly premium in exchange for the insurer to pay all the applicable medical and prescription claims according to the contract.
- Self-Insured Health Insurance Contract: This contract type greatly increases the employer’s risk exposure because the employer agrees to pay all the applicable claims, according to the contract, up to a certain individual level, known as the specific stop-loss, or an aggregate level, known as the attachment point. The employer only pays a small amount of premium for this stop-loss coverage and a small amount of administration charge to the carrier for the administration of the claims. This type of contract is popular with large, financially stable groups.
- Partially Self-Insured Health Insurance Contract (105 Plan): This type of contract is a hybrid of the fully insured and self-insured contracts. It uses a fully insured base contract, usually with a high deductible, and self-insures only the portion under that deductible level. There tends to be a cost savings due to the reduction in premium from the fully insured plan, but the exposure is reduced from the self-insured plan.
Lastly, group health insurance programs can be differentiated by plan type. Over the last decade, the number of different plan types have grown due to the market’s increasing need for cost saving measures. Below are a few of the basic plan types available to employers.
- Traditional Coverage: This type of plan involves a co-payment for service, a small deductible, or co-insurance amount until a maximum out of pocket amount is reach by the employee or employee’s family. This type of coverage is still very common but is not as popular in the most recent years due to the related cost.
- High Deductible Health Plan: This type of plan offers coverage only after a sizeable deductible is met. This type of plan is generally coupled with a Health Savings Account which the employer may choose to or not to contribute towards (See consumer directed below). This is generally a lower cost alternative to employers.
- Consumer Directed Health Plan: This type of plan structures a High Deductible Health Plan with a savings vehicle like a Health Savings Account (HSA), HRA (Health Reimbursement Arrangement), or VEBA (voluntary employees’ beneficiary association). The idea behind this type of program is to give employees incentive to become better consumers of health care. They are rewarded for saving on health care by receiving an asset, often times a portable asset, to use for health care costs in the future.
Flexible Benefit Consulting, Inc. works with your group to determine which type of plan would work best for your unique situation and which type of plan can provide an optimum level of cost savings short and long term. Whether your group employs two or two hundred plus, FBC can design and implement a plan to save you money.
Other Employee Benefit Products:
Although health insurance is usually the biggest budget item and most visible benefit to employees among the portfolio of benefit options, employers can explore other benefit options as well as ways to attach and retain employees or to reduce overall benefit costs. Below are several addition products that Flexible Benefit Consulting, Inc. can broker at the request of our clients:
- Life Insurance: Group life insurance can be incredibly inexpensive for employers. Providing $50,000 in coverage for an employee can be anywhere from six to ten dollars a month. When is the last time you shopped out your group life insurance policy? Reputable life insurance vendors from all over the nation want your business because of its low risk.
- Dental Insurance: Much like health insurance, dental insurance can often times be more inexpensive by shifting some of the risk. If you have 100 employees or more, you could be saving thousands of dollars a year through self-insuring your dental insurance. If you have less than 100 employees, there are other carrier options available to you with a variety of programs and networks that will provide your business with cost advantages. If you do not currently provide dental coverage for your employees, why not give your employees the option to sign up on their own with a voluntary dental option? The dentist discounts alone warrant signing up for this type of program.
- Disability Insurance: Major medical issues are one of the top causes of bankruptcy. With major medical issues comes the loss of work and income, medical bills, and emotional stress. You can protect your employees by providing them with short and long term disability. Already provide disability to your employees and haven’t had a claim in a while, you could be paying way too much. Have you ever been approached about providing self-insurance on short term disability claims? These are just some of the reasons that you should contact Flexible Benefit Consulting, Inc. to manage your disability insurance.
There are opportunities to either reduce costs or enrich benefits in almost all employers’ benefits packages. We can help you locate those opportunities and implement programs to positively impact your bottom line. Call us today and tell us how we might be able to help you and your business.