Group Health Insurance
Group health insurance is one of the most popular employee benefits that financial firms can provide. Offering an attractive health insurance policy is a key benefit that will help your financial firm attract and retain talent. Additionally, for firms with 50 or more full-time employees, offering group health insurance may be required under the Affordable Care Act.
There are a variety of different health insurance plans with different pros and cons. With group health insurance, your financial firm pays premiums to a health insurance company. These premiums are sourced both from company funds and withholdings from employee paychecks. In return for paying these premiums, the insurance company will help pay for medical costs incurred by your employees.
For companies, providing group health insurance can provide an important tax benefit. The premiums you and your employees pay for health insurance premiums are tax deductible. This also reduces your employees’ taxable income, which lowers your business payroll taxes as well.
The five main types of group health insurance are:
- Health Maintenance Organization
- High-Deductible Health Plan
- Preferred Provider Organization
- Point of Service
- Exclusive Provider Organizations
A health maintenance organization, or HMO, offers a limited network of medical providers. Members must go to a doctor that is in-network. They also need a referral from a general practitioner to access specialty care. This plan usually involves low premiums and low or nonexistent copays for employees.
A high-deductible health plan, or HDHP, offers access to a larger network of doctors. It does not require members to have referrals for specialty care. However, it also requires high deductibles, which means members pay significant out-of-pocket costs. Most of these plans offer opportunities for tax-free savings. This means that members are not taxed for the money they use to pay out-of-pocket costs.
A preferred provider organization, or PPO, offers members the largest network of coverage. It does not require specialist referrals. There are some out-of-pocket fees, including deductibles and copays. These are not as high as those involved with an HDHP, however. PPOs have the most expansive coverage of any insurance plan. However, they also charge the highest premiums.
A point of service, or POS plan, gives members the choice to go to doctors that are in-network or out-of-network. There are higher costs associated with out-of-network providers, but they are partially covered. This plan does not provide the same expanse of care as a PPO plan, but the premium costs are also lower. Members can expect to pay some fees out-of-pocket, such as deductibles or copays.
Exclusive provider organizations, or EPOs, offer large networks without requiring specialist referrals. But they usually do not include coverage for any out-of-network service except for emergencies. Premium costs fall between those of HMOs and PPOs.
There are many things to consider when deciding on a group health insurance plan. Financial professionals may need to consider the size of their company, the needs of their employees, and more.