Choosing An Employer Health Plan
Choosing an employer health plan can be difficult and confusing. There are so many nuances to insurance that employers can become overwhelmed selecting the right health coverage for their employees. In today’s workforce, it has almost become a necessity for employers to provide insurance in an effort to keep their current employees and attract new talent. If you would like to get a quote for your small business click here.
The Affordable Care Act (ACA) does not require employers to contribute a specified amount to health insurance, however, most states and insurance carriers require employers to contribute a minimum of 50% toward employee only premiums.
There are multiple plan options from employers to choose from to include both large national brands and local insurance carriers. Each of the insurance carriers may offer one or more of the following plan options.
- Health Maintenance Organization
- Health Maintenance Organizations, better known as HMOs, are the most restrictive plan option when seeking medical services. These types of plans generally require you to stay within a specific network of doctors and select a primary care physician who will be the gatekeeper for all your medical needs.
- Preferred Provider Organizations, most commonly referred to as PPOs, provide you a little bit more freedom and flexibility for medical services. In order to maximize the plan benefits you will want to use contracted physicians and facilities. Although you are able to see out-of-network providers, you will certainly be paying for it.
- Exclusive Provider Organizations (EPOs) are not as recognizable as an HMO or PPO, even among physicians offices. These plan options are a hybrid between HMO and PPO plans. They provide more freedom and flexibility than an HMO but do not have the out-of-network benefits of a PPO.
- Point of Service (POS) plans are a viable option when choosing an employer health plan. Although its acronym may suggest otherwise, POS plans mix benefit features of both HMO and PPO plans. These plans allow more freedom to choose health care providers like a PPO but members would still need a gatekeeper to coordinate their care.
- High-Deductible Health Plan
- High-deductible health plans (HDHP) are a lower cost major medical plan that typically has higher out-of-pocket costs. HDHP can have a HMO, PPO, EPO, POS network. These plans are usually the lowest costing, lowest coverage option available in a plans network. Additionally, some of these plans are compatible with health savings accounts (HSAs) that can help pay for your medical care.
Health Insurance plans are organized by the level of benefits they offer. The plans are categorized by metal tier including bronze, silver, gold, and platinum. Each of these plans shares a cost on the average person enrolled.
- Bronze: typically covers 60% of medical costs leaving the member left with 40%
- Silver: usually covers 70% of medical costs leaving the insured with 30% left to pay
- Gold: generally covers 80% of medical costs leaving the member left with 20% of costs
- Platinum: normally covers 90% of medical costs leaving the insured with 10% of medical costs
In order to be eligible for small group health insurance, a company must have between 2-50 full-time equivalent employees. The NRS Code defines full time as a minimum of 30 hours per week or 130 hours per month. An employer health plan must be offered to all full-time W-2 employees. In most circumstances, 1099 employees are not eligible to enroll in group coverage.
Most carriers require a minimum percentage of eligible employees to enroll in the employer health plan. Typically, carriers require between 50%-75% of uninsured employees to sign up for coverage. The percentage is different with each carrier.
Additionally, if a company has out-of-state employees, they may be eligible to enroll in the company’s plan but the carrier may have a particular stipulation. It is important to discuss this with a broker so they can help to choose the right employer health plan.
In addition to choosing the right medical plan, many employers also look to offer ancillary benefits such as dental, vision, life, short-term disability, long-term disability, etc. to provide a comprehensive benefit package. It can be a strategic and affordable choice for small businesses to offer these benefits to employees. The advantages include but are not limited to:
- Minimal to no cost to the employer: Most voluntary benefits are paid through payroll deductions by the beneficiary so small businesses may be able to offer them with less concerns on their bottom line.
- Controlled Cost for Employees: Employees can access group rates which are typically less expensive than the individual rate.
- Enhance Retention: A comprehensive benefit package is valuable to improve employee morale which contributes to better employee retention.
- Recruiting: It is almost impossible to survive recruiting qualified candidates in today’s job market without offering a comprehensive benefit package.
It is advantageous for small businesses to consider offering ancillary benefits when it can prove to be an asset to both the employee and employer.
When a company is choosing an employer health plan, it is important that they remain ACA compliant. There are different health care laws that may affect employers to include things such as:
- Affordability: An employer-sponsored health plan must offer the minimum essential coverage requirements and not surpass the affordability threshold, which in 2022 is 9.61% of an employees’ household income
- Waiting Period: If a company offers health insurance, they must offer it to all eligible employees when they first become eligible with no more than a 90-day waiting period.
- Summary of Coverage: Employers are required to provide the summary of coverage that outlines the employees’ health plan and its cost.
There are multiple types of employer health plans. Depending on the plan choice, carriers may encourage members to seek medical care from a specific network of doctors, hospitals, pharmacies, and other medical service providers. If the plan offers out-of-network benefits, then members may pay a higher cost share for services outside the plan’s network.