Health Insurance
According to employees, the most important benefit an employer can provide is Health Insurance. It's also the most requested benefit by employees, by far. Medical costs are growing and that means, more than ever, that your company has to choose the plan that suits it best. Whether your employees are in one location or situated throughout the world, Clark & Lavey can find a plan that fits your needs. We can help you find health insurance plans such as:
We can also help with your retiree medical plan. Contact Clark & Lavey for quality health insurance plans that are priced right for your budget.
BRIEF GLOSSARY OF PLANS
Indemnity (top)
With an indemnity plan - sometimes called a "fee-for-service" plan - you can use any medical provider, i.e. doctors, hospitals, etc. You (or your provider) send the bill directly to the insurance company, which pays a portion of it. In most cases, you have a deductible, which is the amount of the covered expenses you must pay each year before the insurer starts to reimburse you - for example, with a $200 deductible, you must pay up to $200 before your plan kicks in.
Once you meet the deductible, most indemnity plans pay a percentage of what they consider the usual and customary (otherwise known as U&C) charge for covered services. The insurer generally pays 80% of the U&C costs and you pay the other 20% - this is known as " coinsurance ". If your provider charges more than the U&C rates, you will have to pay both the coinsurance and any excess charges. For example, if the U&C fee for a particular medical service is $100, the insurer will pay $80. If your doctor charged $100, you will pay $20. However, if your doctor charged you $105 ($5 over the U&C fee) you will pay $25.
Policies typically have an out-of-pocket maximum, meaning that once your expenses reach a certain amount in a given calendar year, the U&C fee for covered benefits will be paid in full by the insurer. You no longer pay the coinsurance. However, if your doctor charges you more than the U&C charge, you may still have to pay a portion of the bill.
There also may be lifetime limits on benefits paid under the policy. Most professionals recommend that you look for a policy whose lifetime limit is at least $1 million. Anything less may prove inadequate.
HMO (top)
Health Maintenance Organizations (HMO) are the longest-standing form of managed care plan. With an HMO, instead of paying for each service that you receive on a separate basis, your coverage is paid in advance. This is called prepaid care. For a set monthly fee, HMOs offer their members a wide range of health benefits - including preventive care. There are many different kinds of HMOs. If, for instance, doctors are employees of the health plan, and you visit them at a central medical office or clinic, one is referring to a staff or group model HMO. Other HMOs will contract with physician groups or individual doctors who have private offices. These are called individual practice associations (IPAs), or networks.
HMOs will give you a list of doctors from which to choose a primary care physician. This doctor coordinates your care, meaning that generally you must contact him or her to be referred to a specialist. With most HMOs there is a copayment (a set amount you pay for certain services - such as $15 for a doctor, $25 for a prescription, etc.) for office visits, hospitalizations, and other health services.
PPO (top)
A Preferred Provider Organization (PPO) plan is a form of managed care that closely resembles an indemnity plan. A PPO negotiates arrangements with doctors, hospitals, and other providers of care, who accept lower fees from the insurer for their services. Because of this, your cost sharing will be lower than if you seek care outside the network of providers.
If you go to a doctor within the PPO network, you will typically pay a copayment. In addition, your coinsurance will be based on the lower charges for PPO members. For example, the insurer may reimburse you for 90% of the cost if you go to a provider within the network. If you choose to go to a provider out of the network, the insurer might only reimburse you for only 70% of the cost. Additionally, with an out-of-network provider you may have to pay the difference between what the provider charges and what the plan will pay.
Another characteristic of a PPO is the ability for members to self-refer. In essence, plan members can refer themselves to the doctor of their choice, including specialists inside and outside the network. It is to be noted, however, that as described above, plan members may incur additional charges for using out-of-network providers.
POS (top)
Many HMOs offer their members the option to self-direct care, as one would under an indemnity plan, rather than having to be referred from primary care physicians. An HMO with this opt-out provision is known as a Point-of-Service (POS) Plan. How the plan functions - like an HMO or like an indemnity plan, for instance - depends on what the individual plan member decides to do at the "point of service."
For further illustration, the following is how these plans typically work:
When medical care is needed, the individual plan member has, in essence, two choices. The plan member can choose to go through his or her primary care physician (PCP), in which case services will be covered under HMO guidelines (usually a copayment is required), or he or she can choose to obtain services from a provider inside or outside the network without their PCP's referral. Services will be reimbursed according to out-of-network rules. A deductible and coinsurance will most likely be required.
Because people who belong to POS plans are responsible for deciding where to seek care, it is very important that they understand the financial implications of the choices they make in choosing medical providers.
Self-Insured Plans (top)
In many employee benefit plans, the use of self-insurance or partial self-insurance makes a great deal of sense. Complete self-insurance - or even partial self-insurance - is not seen very frequently in areas such as group life, accidental death and dismemberment, long-term disability, long-term care, and specific disease policies. Complete or partial self-insurance is, however, seen frequently in group medical, dental, vision care, and short-term disability benefits.
One must be careful of the term "self-insurance". When it is used, it may be referring to those specific plans that are only partially self-insured. One seldom finds an employer that provides medical benefits and does not have some level of stop-loss insurance. It is not at all unusual to see dental, vision care, and short-term disability plans that are wholly self-funded. Due to its very nature, this type of coverage does not require stop-loss insurance for these benefits.
The use of self-insurance is not meant to imply self-administration. Administration outsourcing of all types of benefit plans makes eminent sense as long as the costs for these services are reasonable. A properly administered plan creates cost-efficiency, as those businesses which specialize in the administration of specific coverage can be extremely effective in the management of claim costs.
There can be cash flow advantages to self-funding. Most self-funded plans are exempt from certain state-imposed benefits and insurance laws and can therefore result in further savings for the company. Recommending and establishing a self-funded benefits plan for any employer requires a comprehensive understanding of all the risks and rewards.
Consumer Driven Health Plan (top)
A consumer driven health plan is a High Deductible Health Plan, typically combined with one of two tax-advantaged spending accounts: a Health Savings Account or a Health Reimbursement Arrangement. These plans require a great degree more involvement on the participant's part in choosing when and where to seek care. Ideally, the intention is to bring medical costs down over time. If the participant feels the monetary pinch in paying for medical services, less costly care may be sought.
Plan members use money from their spending account to pay for medical care - including prescription drugs. After the account money is depleted, plan participants must pay out-of-pocket for their medical care until the plan's deductible is satisfied. The High Deductible Health Plan functions like a traditional major medical plan after the deductible has been met.
High Deductible Health Plans that work in conjunction with Health Savings Accounts have very strict and specific deductible minimums and plan requirements, as specified in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
Overview
