The Basics of Health Insurance

One of the first benefits you are likely to consider for your business is a health insurance plan. Most employees, when they are considering a job, will look for some kind of assistance, offered by the company, to help them deal with medical bills. Of course, these plans are also carefully monitored and controlled by the federal government as well as state regulations and they must be followed carefully. There is also a wide variety of health insurance providers.

So, what do you offer your employees? What kind of insurance plan will work best for your company? Well, first, you need to know what kind of health insurance plans exist.[/p]

Indemnity or Fee-for Service

The first and most basic plan is sometimes referred to as an “indemnity” plan and sometimes is referred to as a “fee-for-service” plan. This is often the first plan most companies consider and was really the first type of health insurance plans offered to companies back when an employer first started offering health insurance coverage to employees.

With these plans the insurance company pays for a pre-determined portion of the employee medical bills. The employee pays a monthly fee, which is also known as a premium, which is normally deducted from their paychecks. Each employee will also have a deductible that they will need to satisfy, and the amount of that deductible can vary per plan. Once that deductible is reached, the employee and the health insurance plan pay the bills together. In some very generous plans, once that deductible is reached, the insurance plan will pay for the largest percentage of the amount.

These plans allow employees to use any doctor they want and will not limit them to a certain network of providers. Once an employee has visited a doctor sought medical care, they will have to fill out a medical claim form to ensure payment from the insurance company. Many of these plans also offer a kind of cap so that the employee will not have to pay over a certain amount of money for benefits per year.

These plans are often not as extensive in what they cover as some of the other options. For example, the basic plans often cover hospitals stays and services while in the hospital and maybe some doctor visits. The major medical options will pay for more and help toward recovering after long illnesses or serious injuries.

HMO and POS

The HMO is also known as a Health Maintenance Organization and is the health care plan most often associated with the term “managed care.” These kinds of plans came into being when the costs of health care continued to rise to the point where employees could not pay for their medical care and then wait for reimbursement and it became often too expensive for insurance plans to pay out the huge medical reimbursements.

The HMO requires that the employee choose a preferred medical provider from a network that has been approved by the provider. This person then acts as a kind of “gate-keeper” who then monitors the employee or patient for every medical visit they need to make. Before an employee can seek a specialist, such as a knee specialist, they would need to visit their preferred care provider and get a referral that would then need to be submitted to and approved by the insurance plan.

The POS plan is an off-shoot of the HMO and also requires the use of a specified network of providers for maximum benefit. The switch here is that the employee can seek assistance outside of the network and still get some benefit, but they will have to pay the lion's share of the medical bills.

PPO

The PPO is known as a Preferred Provider Organization. This is also a network of providers that has been approved by the insurance provider, but the employee does not have to visit their preferred medical care provider in order to see a specialist. They will, however, have to pick a specialist from the network for the maximum benefit.

With the PPO there are no forms to fill out as there can be with the HMO and POS forms. There is some increased freedom of choice for the employee, but there is also an increased cost and the premium for a PPO is likely to be much larger than that of an HMO or POS.

Most PPOs also provide some coverage for medical assistance sought outside the network, but the amount the employee will have to pay is very high.

Once you decide what insurance plan you think fits your companies' needs, it's just a matter of contacting providers and deciding which costs fit into your budget.