Group Health Insurance

Friday, March 21st, 2008
Robert Lawrence asked:

To discuss the terminology Group Health Insurance, we must first familiarize ourselves with the concepts Insurance and Health Insurance.

Insurance is a kind of protection, a safety net against unforeseeable losses. No one knows what the future holds, and insurance is a good way of preparing for what may come. Health insurance is a protection against medical costs. The insurer pays the cost of the insured person if the latter falls ill – due to accident maybe, or any of the covered causes. Magnify the health insurance more than ten times over and you get the Group Health Insurance.

Group Health Insurance is a health coverage based on a group of people under a company or an organization. The cost of the insurance is allotted among the members of this group. The group enjoys a wide range of benefits of Group Health Insurance. A master contract or policy is issued to their employer or to any of the group’s affiliations.

Health insurance is one of the most important benefits offered to an employee through their employers. Not only does an employee feel secure with this insurance, he also feels assured of the care of his employers. Companies spend billions annually for health insurance, and group health insurance make up the bulk of the revenues earned by health insurance companies.

Group health insurance can be availed by any company with two or more employees. Requirements vary around the world, though one constant requirement is the proof of legitimacy of the company’s operation. The number of employees to be insured under the group plan determines the type of coverage available to the employer. A company with more than a thousand employees will have customized health plans, and these may include additional benefits.

With the rising costs of prescription drugs and health care in recent years, companies have experienced a drastic increase in the cost of providing health care benefits to their employees. Many companies are forced to cut back on the benefits of the health plan, and some even require their employees to pay a higher share of the monthly premium of the insurance, even to the point of requiring them to pay the 100% of the dependent premium! Decreases in the health insurance benefits cause some employees to pay medical expenses themselves when they require medical treatment or prescription drugs. Businesses offering full premium payment for employees and their dependents are fast decreasing.

Submitted by Minnie

Small Business Health Insurance: a Wise Investment

Wednesday, March 19th, 2008
Jenny Black asked:

Small business health insurance is one of the benefits that you intend to provide to your small group of employees. Apart from wages many companies provide benefits like paid vacation, maternity benefits, etc to retain the employees in their organization. Small business health insurance is an added assistance to all these benefits.

A small business organization generally comprises of 2 to 50 employees. Each employee is very vital to the organization. If, even a single employee falls ill, the whole organization will become dysfunctional. Therefore ensuring a good health of the employees is one of the most essential responsibilities of the employer who owns a small business organization.

With the advancement of science and technology, the costs of medical benefits are also on a rise. This is a major reason which prevents people from going to a doctor for any health problems. It should be kept in mind that if an illness is not taken care of at the initial stage it may lead to many complications at a later stage. By providing an appropriate health insurance policy for all the employees through group health insurance, an employer can free his employees from all the health related problems.

Most small business owners provide small business health insurance through group plans which use organized medical networks. There are several types of networks: HMOs, PPOs etc. You should know about all of them because each will be having different characteristics that will affect your choices or the types of insurance you want for your small business organization.

In HMO or Health Maintenance Organization, the medical needs of the people who subscribe are provided by a managed system of medical care. On the other hand, physicians, health care providers of all types, hospitals and clinics sign contracts with the PPO (Preferred Provider Organization) system to provide care to its insured people. HMOs often have lower premiums but they must be available in close proximity to your employees and the workplace. PPOs and POSs tend to cost slightly more but are flexible for your employees.

These all things should be made clear before purchasing any small business health insurance. Apart from that through small business health insurance you can also get insurance quotes for yourself and your family members. This can be availed by paying a very cheaper rate of insurance. Tax incentives are also available with the purchase of small business health insurance. In this way you can save a few pounds for yourself.

You should carefully do a study of the quotes as provided by different providers. The pros and cons of almost all the details available need to be addressed. An exhaustive comparison of the different insurance companies and their rates of premiums should also be done by you. This is much easier now with the internet that provides almost all the information that you will need in the process of purchasing a small business health insurance.

Submitted by Yadira

Are You Leaving Health Insurance Money on the Table?.. Top 10 Money-wasters for Group Health Insurance Benefits

Saturday, March 15th, 2008
John Klimchak asked:

As an employer or a participant you might be leaving money on the table by not properly taking advantage of certain features and benefits of your company’s health insurance. As a licensed Consultant and Group Benefits Brokerage company, with clients across the country, we are successful in reducing group benefit expenses because of our experience and our intimate knowledge of the factors used in determining pricing. This top 10 list should be helpful in increasing your insurance knowledge, maximizing your plan benefits and possibly reducing your company’s expenses.

Background and Overview:

For most companies, group benefit plans, specifically medical benefits, are among the highest non-producing company expenses. Unlike other expenses, medical benefits hits home since it affects our employees and our families personally. Therefore, it is of paramount concern that the CFO and Director of Human Resources take into consideration the needs of their employees, the needs of their employees’ families, pricing, and specific benefits being offered.

The ability for an employee or an employee’s family member to use a favorite physician such as a Pediatrician or an OB/GYN is often affected by this decision. The ability for employees and their families to use specialized treatment centers in the event of a catastrophic medical situation also lies in the balance of the Health Benefits decision. Quality and access to medical care varies from insurance carrier to insurance carrier.

Staffing and Retention:

The primary purpose of Group Benefits as a whole as it relates to employers is to attract and retain employees. It goes without saying that the broader the benefits, the easier it would be to attract and retain a higher quality workforce.

As a reciprocal, industries that utilize high turn-over positions with minimum-wage employees may not necessarily choose to utilize the highest quality insurance policies to attract and retain employees. Employee pools may be abundant and the bottom-line total expenses may be more important than the quality and level of care offered.

With that said, let us share with you some money-saving ideas and under-utilized features of your medical benefits. Keep in mind that some items may relate to your current coverage while others suggest a change in coverage or a change in features of your plans.

The following represents our list of the top 10 frequently made mistakes as it relates to Group Health Insurance. This list is in no particular order. Each item may or may not apply to your current situation.

Top 10 Medical Benefits Mistakes:

1. Not Catching Medical Problems Early

To use a few cliché’s, “a stitch in time saves nine” or “prevention is the best medicine”, or “kill the monster while it is tiny.” I am not sure if the last one is a main-stream cliché but it does hammer home the point that prevention is often the best medicine. Early detection is the second best course of treatment. Many doctors argue that colon cancer is extremely treatable if it is caught in the earliest stages. If the cancer is not detected early there is a risk of the cancer getting more aggressive and spreading through the body. Every person should take the time to get regular exams. Every person should be aware of key medical indicators such as weight, blood pressure, and cholesterol levels. As a person gets to certain recommended ages, mammograms and other early detection tests should be done regularly. Just because you never went for a cholesterol check does not mean your cholesterol levels are zero. That is as foolish as driving around in an automobile without a gas gauge and assuming you don’t need to put gas in it since there is no indication of the level. The life you save with early detection could be your own or someone who you love.

Depending on the size of your group and which state your business is located in, early detection means fewer large insurance claims which translates into lower premiums for your company.

2. Not Using the “Value Added Benefits”

Many times, when you think of medical benefits you only think about doctor visits and drug plans. Often, employers and employees do not realize that their insurance carrier might also include services known as “Value Added Benefits”.

Health Insurance Carriers offer these Value Added Services to encourage healthy lifestyles. Healthy lifestyles would yield healthy employees which keeps insurance claims down.

It is important to understand your value added benefits for several reasons. First you, your family, and the employees you work with can benefit from these services. Second, your management or human resources department might come off as heroes just by telling employees about these value added benefits. The benefits are already included so you might as well tell people about them.

Examples of Value Added Benefits Include:

a. Vision – some carriers have pre-negotiated discounts for vision care such as eye exams and eyeglasses.

b. Nutrition and Supplementation – Certain carriers provide discounts or reimbursements for nutritional supplements. Supplementation might keep employees healthier and prevent certain diseases. Some employees are often already paying out-of-pocket for supplements so any discounts become bottom-line savings for the employee.

c. Quit Smoking – Employees may be entitled to discounts on programs that relate to quitting smoking. Without going into a lecture as it relates to the dangers of smoking, let’s just say that when an employee is ready to quit, it is easier to do it with the help of professional programs. In the event that the Surgeon General is right about the dangers of smoking, healthier employees are happier and more reliable as an employee. This could also avoid future hospital visits and catastrophic treatments as well as delay premature death.

d. Weight Management – Employees may take advantage of weight management programs. In some cases employees might already be using well known programs such as Weight Watchers™ or Jenny Craig™. Many scientific medical studies directly relate disease and health risk to an individual’s weight. Once again, a healthy employee calls in sick less often, is more productive, and on a selfish side, is likely to minimize the number of claims against your Insurance Policy. Certain company sizes in certain states may be rated and premiums are charged based on the claims filed against the insurance carrier.

e. Gym Membership – Discounts and reimbursements may be available for health club membership.

f. Hearing – Certain hearing centers may have pre-negotiated discounts with your insurance carrier.

g. Bicycle Helmets – Safety equipment such as bicycle helmets may be available at a discount with specific insurance companies and retailers. Certain states mandate that children under a specified age are required to wear a helmet while riding bicycles, skateboarding, or roller skating. Even if helmets are not mandated, it is alarming how many serious injuries might have been prevented with the proper head protection. If you need or want a helmet anyway, you might as well get a discount on it.

h. Store Discounts – Various retailers may have a pre-negotiated incentive worked out with your insurance company such as baby stores or household goods. This is good for the store from a marketing prospective and it is good for the consumer to get a discount.

i. Security Improvements – Security companies my provide discount services for your home protection and safety additions.

j. Stress and Alcohol Management – Different services may exist for stress management and alcohol rehabilitation and treatment programs.

k. Mail Order Discounts – Certain carriers offer additional discounts for mail order prescriptions. This is especially useful for drugs prescribed for the long-term such as heart medicine or cholesterol drugs. You know you need it any way so you might as well stock up by mail.

3. Not Getting a Second Opinion:

Different Insurance professionals have different experiences and abilities. Some Brokers are only Brokers while others are also Licensed Insurance Consultants. Some Brokers specialize in Property and Casualty or Life Insurance while others specialize in Group Health. If you are concerned with your Health Insurance rates and services, perhaps a specialist is what your company really needs.

Speaking as an insurance professional, we of all people, respect and appreciate client loyalty based on past service and existing relationships. On the other hand, how do you really know that you have the most appropriate policy and features if you do not get a second opinion from a different Broker or Consultant? If the relationship with your Broker is that solid, it would not be difficult for your Broker to keep your business. If your Broker’s skills are not current and sharp as it relates to your company, his/her complacency might be costing your company tens of thousands, if not hundreds of thousands, of dollars.

Oftentimes, an insurance professional might become complacent with existing clients. This may be due to increased workload, understaffing, or the fact that they are too busy finding new clients. They may not be focusing on your bottom line.

A second opinion introduces a fresh perspective regarding your company’s health insurance needs and options. It keeps your broker honest and reminds them that they need to continue to service and provide creative solutions if they wish to keep your business.

Make sure the carrier alternatives are of “like kind and quality”. That simply means they are an apples-to-apples comparison.

Mix it up a little. Find out what the increase (or decrease) in premiums might be if you increase (or decrease) the co-pay, deductibles, in-network deductibles, and co-insurance. Look at different options with the drug plan as well.

Sometimes it pays to self-insure a portion in order to reduce premiums. Look at the total exposure, have your broker figure out worst cases scenarios, and contemplate the probability that the scenario could come true. This dovetails with mistakes #4, #5, and #6 coming up.

4. Not Looking at the Big Picture of Total Costs

Very often, companies only look at the monthly premiums associated with their healthcare coverage. This is not the only variable when it comes to insurance rates. It is important to look at the total picture which includes:

a. Co-pay amounts

b. In-Network and Out-of-Network Deductibles

c. In-Network and Out-of-Network Co-Insurance Levels

d. In-Network and Out-of-Network out-of-pocket expenses

e. Out-Of-Network Reasonable and customary reimbursement levels

f. Gated or Non-Gated

g. Drug coverage co-pays, co-insurance and deductibles

h. Disease Management and Wellness Programs

i. Employer/Employee Contributions

j. Network Accessibility

k. Disruption Analysis

l. Monthly Premiums

m. Maximum Exposure

n. Maximum Benefits

o. Tax Treatment (See #9)

p. Quality of Coverage

l. Introduced deductibles on drugs

m. Generic and non-formulary drug discounts

Each of the above can be a topic unto itself. We can offer a free consultation to look at your coverage and suggest ways to maximize cost savings and improvements. Please see the “About the Author” section at the bottom of this article for more details.

Paying 100% for Employees

If you pay 100%, by law, employees cannot “waive out” of the insurance plan. Participation must be 100%. By paying less than 100% of the benefits you are able to “create consideration”. This gives you flexibility.

What is so bad about having to take advantage of benefits if you are paying all of it? The fact is, certain employees would not be able to use a spouse’s insurance plan if they had to use yours. The spouse might offer better quality coverage with more options and better quality doctors.

Do you really want to have to pay for everyone’s insurance if they do not want insurance or prefer to waive coverage and go on their spouse’s plan? That means paying higher expenses for something that will likely never get used by certain people.

5. Not Listed as the Right Group Size (or Perhaps a Different Stated Size) Is There Common Ownership?

Depending on your circumstances, such as what state that you do business in, you may or may not benefit by being classified as a small group or as a large group. By simply classifying clients in the most appropriate group size we have saved clients thousands of dollars.

Generally speaking, small groups are considered to be groups consisting of between 2 and 50 full time eligible employees and large groups are considered to be groups consisting of 51+ full-time eligible employees. A full-time eligible employee is not the same as an employee that may be covered under the benefits. For example, a group can have 55 employees, with 40 employees on the group health plan, and be classified as a large group.

Depending on your employee population it could be either advantageous or disadvantageous to be considered a 2-50 sized group. Read #6 of this list for more information.

Is There Common Ownership?

In certain situations some companies have common ownership with other companies. Depending upon the percentage of ownership, in certain cases it makes sense to insure the companies separately, while in other cases it might pay to combine the employees and consider it a larger group.

6. Not Knowing Your Employee Population or Offering Different Plans

Similar to #5 in classifying the group size, money can also be saved by having an overall understanding of the demographics that makes up your group. Typically, younger people are healthier and can often afford to take certain medical risks that older employees cannot afford to take. If you realize that your company is mostly made up of younger people who are healthy, it might be a good idea to utilize a high-deductible tax qualified plan with a Health Savings Account (HSA). A high deductible plan is essentially betting on the fact that claims will be minimal throughout the year, so why not pay the lowest premiums available, and at the same time accumulate cash in the Health Savings Account (HSA)?

A high deductible plan does not necessarily mean that you intend to pass on the increased deductibles to your employees. Your company can be willing to pay the deductible (or a portion) through a Health Reimbursement Account (HRA).

Not Offering Different Plans for Different People

More recently than not, the market has been trending towards companies offering multiple insurance plan options. The company may provide a base contribution allowing the employees to choose between “a base”, “a buy-up”, or “an HSA plan”.

In addition, companies can offer a plan based upon employee classification. For example, “Class 1” employees can consist of executives and managers and “Class 2” employees may consist of all others.

7. Not Comparing your Coverage to Your Peers:

The trick is to be competitive without giving away the shop. Typically, to generalize for a moment, law firms might offer the best insurance available for the money while assembly line workers might be given average benefits for manufacturing. But what is average and how do you find out what is standard and customary?

A “Benchmark Analysis” is a report that can be ordered to get statistics and trends about comparable companies in your industry, company size, and/or in your region. Although these reports often cost some money, the information provided could be valuable in attracting and retaining qualified employees without giving away all of the profits.

8. Blindly Auto-Renewing

Even if you love your Broker, it is a mistake in not treating each renewal period as an opportunity to find out what policies or other insurance companies are more competitive or appropriate for your company. Each renewal period should be treated just like you are looking for insurance companies for the first time.

With our clients this step is invisible to them. We always look at the renewal numbers and compare them to other carriers or to other policies within the same carrier. Over the years it became obvious that the only constant in life is change. Based on the insurance company’s desire to increase or decrease market share, they often choose to increase or decrease their risk tolerance and policies. A renewal period is a great opportunity to make sure you have the right coverage for your circumstances.

9. Not Using the Right Tax Treatment for Your Company

Although we encounter this particular “money-waster” often, we are not an accounting firm and suggest that you speak with your tax advisor, accountant, or CPA before doing anything.

Pre-Tax or After-Tax Dollars:

Typically speaking, health insurance premiums are tax deductible with pre-tax dollars, while co-pays, deductibles, co-insurance, and prescription co-pays are usually paid with after-tax dollars. It might be a good idea for your accountant to work with your broker to come up with a tax strategy that works well with your human resources and health benefits objectives.

Employee Tax Treatment

Are the employees paying for their portion of the health insurance premium through the use of a “Section 125” premium only plan? This will allow employees to pay the health insurance premium on a pre-tax basis thereby reducing the employer payroll taxes.

You may want to consider offering a Flexible Savings Account (FSA). An FSA allows employees to pay for a portion of their un-reimbursed medical expenses on a tax-free basis.

10. Losing Money Due to Poor Administration.

We hear about it almost every day. Due to poor administration, employers neglect to advise the insurance carriers of newly terminated or newly eligible employees.

In many cases, the guidelines are rigid and clear. A simple mistake with administration may cause your company to either pay insurance on someone who is no longer with the company or it may open yourself up to liability. Had an employee been eligible for benefits, but somebody forgot to do the paperwork, your company could be liable for claims.

Liability of not setting out corporate notices

Notices may need to be communicated due to changes in coverage or policy changes. Once again, in many cases the burden of proof might be on you. If you do not notify employees of the changes you might be held accountable for the lack of notifications.

COBRA Notifications

Last but not least, in many circumstances an employee has a legal right to be notified if they are eligible to participate in the COBRA insurance program post termination. COBRA is the Consolidated Omnibus Budget Reconciliation Act. This gives employees the right to continue health insurance given certain qualifications. By not properly notifying the employee, your company is in violation of federal law and can perhaps be held accountable for claims and medical expenses incurred by the employee. By properly notifying the employee, the liability lies in the hands of the employee and the insurance company if they choose to continue coverage.

So What is Your Next Step?

It’s great that you made it this far into the article and that by itself gives you plenty of things to look at in deciding if you are making any of the above mistakes. In some cases you can change your behaviors midstream. For example, you can find out from your current carrier if there are any Value Added Benefits that you may not be aware of. You can also make sure that your company has an accurate list of employees who should be on the policy or need to be added.

Once again, Group Health Insurance is one of the largest non-producing expenses for most businesses. It is up to the business as well as their employees to maintain an active role with wellness, routine exams, and disease management programs. Insurance might be considered an expense, but when it comes down to it, health and lives are at risk.

DISCLAIMER: Information is intended as a general nature. Always consult a licensed professional before implementing anything.

Copyright© 2008 Economic Evaluation Group, Inc.

ABOUT THE AUTHOR:

John R. Klimchak has been in the insurance field for over 20 years. He is a licensed Insurance Consultant and a Licensed Insurance Broker. Mr. Klimchak is also the President of Economic Evaluation Group, Inc. (www.eegroup.com), a firm specializing in Group Health benefits and other related services. For a free consultation call (516) 338-2800 and reference the “Top 10 Mistakes Article”.

Submitted by Lauren

Health Insurance Directory Helps to Find the Best Group Health Insurance Plan

Thursday, March 13th, 2008
Roberto Luongo asked:

Many families and groups of people have now started realizing that a group health insurance plan is vital to stay protected in case of unexpected medical emergency. Today, group health insurance plans have also become popular in business sector also where the employer provides these insurance plans in form of incentives and benefits.

Almost all medical treatment and expenses are included in a group health insurance plan, such as dental care, medical bills, hospitalization, prescription cards, medicines, tax assistance and even pet care.

There are varied kinds of group health insurance plans made available by insurers meeting different types of requirements of individuals, families and companies. To search for the best health insurance plan, whether for your family or for employees, one can browse through a health insurance directory to find the best health insurance plan available. The health directory contains a list of different insurance plans along with the insurance companies offering group health insurance plans.

A health insurance directory is one of the best resources to look for a health insurance plan. The directory contains a detailed listing of insurance agents and brokers with their names, addresses, contact numbers, e-mail addresses and websites providing health coverage to people. The agent listings available in such directories are also listed out by location.

The health insurance plans and the insurers listed in the online health directory are categorized under various sections covering various medical specializations, such as cosmetic surgery, emergency services, fitness, first aid, fitness, injury claims, nursing, nutrition and pharmacy.

Other branches that are covered in the group health insurance plans include optical care, sports medicine, weight control and mental health. The insurers provide compensation for all these types of health related problems that may occur at any time in your life.

By referring to a health insurance directory, you can find the best insurance plan for your family. Also businesses can refer to this directory to find out which group health insurance plan would be suitable to their employees and the company.

Submitted by Solomon

8 Guidelines to Group Health Insurance

Wednesday, March 12th, 2008
MatthewPawlina asked:

Group health insurance is a policy that covers all individuals in a group. Insurance companies offer great incentives to employers who opt for group insurance policies.

Group insurance policies include: fee-for-service plans; health maintenance organizations; point of service plans; and preferred provider organizations plans. It is important to choose a group health insurance plan that provides maximum benefit to employees.

Before buying a group insurance policy you need to know your options and the associated costs.

1. Consider buying a group health insurance policy online. Insurance rates online are more competitive than offline. Check insurance directories as well as websites hosted by insurance companies themselves.

2. Get quotes from at least three providers and study the group insurance coverage offered in detail.

3. Quotes are based on number of employees and the kind of coverage you need. Determine whether you want the group health insurance to cover maternity, health, dental, hospitalization and so on.

4. Sit down with an insurance broker and plan the group insurance coverage such that you draw maximum benefits for the lowest possible premium.

5. Work out how much premium you will bear and what will be paid by the employees. Think whether you want to include additions like long term care insurance or critical illness cover.

6. Choose an insurance company that is dependable and has good financial standing.

7. Before buying coverage check about: emergency room services; out-of-pocket expenses; the grievance and appeals process; and limitations or exclusions.

8. Do background check on the insurance company and ask for a copy of the latest member-satisfaction survey from the Better Business Bureau.

Be prudent and ask for references and actually make an effort to check them out. Don’t go by the summary of benefits; study the policy in detail and understand what is covered and what is not. In case of doubt seek clarifications or make use of an insurance consultant. Often the savings are greater as a consultant will help you choose the most appropriate group health insurance policy.

Learn ways in which to reduce the group health insurance costs. Run wellness programs and opt for a health savings account. These accounts are tax saving and pay for medical expenses. Try and join a larger group this will lower the costs of group health insurance costs. So if you have fewer employees then partner with other business in your state.

Always comparison shop for a group health insurance plan; get an insurance agent to do the ground work for you. Also checking with other business owners will be beneficial as you will know what they pay for group health insurance. Learn all about group health insurance from the many insurance websites online. Be an educated business owner and choose a group insurance health plan that offers great benefits for the lowest costs.

Submitted by Lilian

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