Are You Required To Provide Health Care
Insurance To Your Employees
The single most
expensive benefit offered by employers to employees is
Health Insurance. Health insurance is extremely
important to most employees and is therefore a very
powerful benefit in recruiting and retaining the best
workers.
This is health coverage for employees paid for by the
employer (with or without some employee contributions).
It is a benefit potential employees look for when
determining where to seek employment.
Federal law does not mandate
employers provide health care for their employees if
they have under 50 employees.
The
Affordable Care Act does mandate that employers with
over 50 employees provide health insurance. However, once an employer
with under 50 employees decides to offer medical
benefits to their employees federal laws such as HIPPA
and COBRA comes into play. If it is offered
to one employee it must be offered to all employees.
The Consolidated Omnibus Budget Reconciliation Act
(COBRA)gives workers and
their families who lose their health benefits the right
to choose to continue group health benefits provided by
their group health plan for limited periods of time
under certain circumstances such as voluntary or
involuntary job loss, reduction in the hours worked,
transition between jobs, death, divorce, and other life
events. It also requires employers to do certain
things, such as provide notice.
Small group health insurance provided by insurers is
regulated by the states. All States
(except for HI) do not mandate employers provide health
care for their employees. However, some states do
mandate that certain type of insurance coverage must be
provided if employers chose to provide health insurance
to their employees.
In an effort to
provide health insurance to those citizens without it,
several states recently introduced legislation focused
on providing universal health coverage. Check with your
state
insurance department to understand the
current laws in your state and how they might affect
small businesses. (A word of caution: most States’
Insurance Department websites are focused on providing
information to insurance agencies that they regulate and
to individuals).
Employers who
decide to provide health insurance to their employees
will normally do so under one of two type of Group
plans; Indemnity or Managed Care.
Indemnity Plans
Indemnity plans are
also known as "traditional indemnity,"
"fee-for-service," or "FFS" plans.
These major medical plans typically have a deductible –
the amount you pay before the insurance company begins
paying benefits. After your covered expenses exceed the
deductible amount, benefits usually are paid as a
percentage of actual expenses, often 80 percent. These
plans usually provide the most flexibility in choosing
where to receive care.
Managed Care Plans
Managed Care Plans:
There are three basic types of managed care plans:
HMOs, PPOs, and POS plans.
Health Maintenance Organization (HMO) plans
– These major medical plans usually make the insured
choose a primary care physician (PCP) from a list of
network providers. Your PCP is responsible for
managing all of your healthcare. If you need care
from any network provider other than your PCP, you
may have to get a referral from the PCP to see that
provider. The insured person must receive care from
a network provider in order to have the claim paid
through the HMO. Treatment received outside the
network is usually not covered, or covered at a
significantly reduced level.
Preferred Provider Organization (PPO) plans
– In these major medical plans, the insurance
company enters into contracts with selected
hospitals and doctors to furnish services at a
discounted rate. As a member of a PPO, you may be
able to seek care from a doctor or hospital that is
not a preferred provider, but you will probably have
to pay a higher deductible or co-payment.
Point of Service (POS) plans
– These major medical plans are a hybrid of the PPO
and HMO models. They are more flexible than HMOs,
but do require you to select a PCP. Like a PPO, you
can go to an out-of-network provider and pay more of
the cost. However, if the PCP refers you to an
out-of-network doctor, the health plan will pay the
cost.
Health Savings Account (HSA) and
High Deductible Health Plans (HDHP)
Health
Savings Accounts (HSA) is not health insurance. Rather,
it is a savings plan that offers an alternate way for
consumers to pay for their healthcare. HSAs enable you
to pay for current health expenses and save/invest for
future qualified medical and retiree health expenses on
a tax-free basis. Health Savings Accounts (HSAs) were
created by the Medicare bill signed by President Bush on
December 8, 2003. Changes to HSA took effect in
2011 under the Affordable Care Act.
Visit the IRS to review the changes.
In
order to open an HSA, an individual must be covered by a High Deductible Health Plans
(HDHP). Sometimes referred
to as a “catastrophic” health insurance plan, an HDHP is
an inexpensive health insurance plan that generally does
not pay for the first several thousand dollars or more
of healthcare expenses (i.e., the “deductible”) but will
generally cover health expenses after that.
For
2006, in order to qualify to open an HSA, your HDHP
minimum deductible was at least $1,050 (self-only
coverage) or $2,100 (family coverage). The annual
out-of-pocket expense (including deductibles and
co-pays) for 2006 could not exceed $5,250 (self-only
coverage) or $10,500 (family coverage).
This is not a substitute for employers
who do not want to provide health insurance to their
employees.
Suggestions for Employers To Reduce
Health Insurance Cost
Have a high deductible:
This discourages casual use by having the employee pay
the first dollars. With some of the money you save, you
could contribute towards the deductible.
Limit
family coverage: Don't
pay the family coverage for an employee whose spouse is
covered under another plan.
Offer
only a major medical plan:
This approach makes the employee responsible for
day-to-day health care, while your program would help
out for major care.
Insist
on pre-admission review always:
This could reduce in-hospital procedures, making them
out-patient services.
Piggy-back on another company's policy: Trade
associations, cooperatives, suppliers, or other business
affiliates offer health insurance policies at reduced
rates.
COBRA (Consolidated Omnibus Budget Reconciliation Act)
COBRA generally requires that group
health plans sponsored by employers with 20 or more
employees in the prior year offer employees and their
families the opportunity for a temporary extension of
health coverage (called continuation coverage) in
certain instances where coverage under the plan would
otherwise end.
