Employer sponsored medical benefits designed to attract and retain top talent as well as provide financial security to employees in the event of a serious medical event.
According to the 2011 UBA National Health Plan Survey, in addition to the plan design having an impact on cost (i.e. Deductible, Coinsurance, Copays etc), the plan type (HMO, POS, PPO, Consumer Driven etc) and the way in which benefits are communicated to employees can have a big impact on overall cost and the company’s bottom line.
HMO's, PPO's, POS's & Indemnity Plans
Just as there are many ways to finance a home or a car, there are a variety of methods for both businesses and their employees to finance healthcare.
Which method we use to finance our healthcare as business owners will depend in part on; how many employees we have, is our workforce growing or stable, do we have a favorable agesex demographic, and whether or not we have consistent cash flow.
Businesses that choose the Self-Funding method for financing their healthcare generally are looking for; long term cost management, have or are considering employer based health awareness or early detection and prevention programs, they want more control over plan design and are looking for greater flexibility in cost management, and finally, better claims reporting than what fully insured programs typically provide.
Simply Put…. a Consumer Driven Health Plan (CDHP) is an approach for providing healthcare benefits that combines a core contribution of funding by employers with increased choice and responsibility for employees and increased accountability for health plans and providers.
Typically, an employer makes its core contribution toward either a “Plan” or an “Account”, or both, and then gives employees choices as to how the money will be spent.
These plan designs or models include:
Dental Insurance is an important employee benefit that can be offered as Employer Pay All, Employee Pay All, or a combination of both. In addition, Dental benefits can be offered on an Indemnity basis (any provider), PPO (richer benefits when you see in-network dentists), or Passive PPO (benefits are the same in-network vs out-of-network, but the discounts only apply to in-network services.
Group Life Insurance is a great way to add additional life insurance to your portfolio at a very low cost. Often times, if you enroll when you are first eligible, no medical questions will be asked. Many employers will pick up the cost of the Base Life insurance then give employees an opportunity to purchase additional coverage on a Voluntary basis.
Disability Coverage (LTD and STD)
According to the Social Security Administration (fact sheet 1-31-2007) three in 10 workers entering the workforce will become disabled before retiring. Long and Short Term Disability Coverage protects your income in the event of an accident or illness and you’re unable to work. Many employers provide this as a benefit and will pay for all or part of the cost.
This coverage can also be purchased on a voluntary basis through payroll deduction.
With increasing deductibles, financial uncertainties, and employers scaling back the amount of employee benefits they are paying for, voluntary benefits are becoming a very important and widely sought after, employee benefits.
These coverages are offered on an employee pay all basis and include; Life Insurance, Cancer and Specified Disease Coverage, Critical Illness, Accident, Hospital Indemnity, Heart & Stroke and Disability coverage. Benefits are payable directly to the insured as opposed to paying the provider.
Flexible Spending Accounts
A flexible spending account (FSA), also known as a flexible spending arrangement, is one of a number of tax-advantaged financial accounts that can be set up through a cafeteria plan of an employer in the United States.
An FSA allows an employee to set aside a portion of earnings to pay for qualified expenses as established in the cafeteria plan, most commonly for medical expenses, but often for dependent care or other expenses. Money deducted from an employee’s pay into an FSA is not subject to payroll taxes, resulting in substantial payroll tax savings.
One significant disadvantage to using an FSA is that funds not used by the end of the plan year are lost to the employee, known as the “use it or lose it” rule. Effective 2013 as a result of PPACA, the maximum contribution for health, dental, and vision expenses will be $2,500.