Health Insurance

According to employees, the most important benefit an employer can provide is health insurance. Whether your employees are in one location or many, situated locally or around the world, Clark & Lavey can find a plan that fits your needs, including:

Here are brief descriptions of the most-common health insurance options. You can click on them for more detailed information in our Glossary.

Indemnity Plans (top)
Sometimes called a “fee-for-service” plan, Indemnity Plans allow employees to use any medical provider, hospital, etc. Bills are sent directly to the insurance company, which pays a portion of them.

In most cases, there is a deductible and coinsurance, and an out-of-pocket maximum, meaning that covered benefits are paid in full by the insurer once the limit is met. Most professionals recommend policies whose lifetime limit is at least $1 million. Anything less may prove inadequate.

Health Maintenance Organizations (HMOs) (top)
Health Maintenance Organizations (HMOs) are the longest-standing form of managed care plans. With an HMO, instead of paying for each service that a member receives on a separate basis, 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. HMOs provide a list of doctors from which to choose a primary care physician. This doctor coordinates care, and generally must be contacted for referrals to specialists. With most HMOs there is a copayment for office visits, hospitalizations and other health services.

Preferred Provider Organizations (PPOs) (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, an employee’s cost sharing will be lower from care inside their network of providers. They can choose providers outside their network, but their coinsurance will be based on lower charges for PPO members and higher charges for providers outside the network.

Point-Of-Service (POS) Plans (top)
Many HMOs offer their members the option to self-direct care, as one would under an indemnity plan. An HMO with this opt-out provision is known as a Point-of-Service (POS) Plan. With these plans, employees can choose to go through their primary care physician (PCP), in which case services will be covered under HMO guidelines; or they can choose to obtain services from a provider inside or outside the network without their PCP’s referral.

Because people who belong to POS plans are responsible for deciding where to seek care, it is very important that you understand the financial implications of the choices made in choosing medical providers.

Self-Insured Plans (top)
In many employee benefit plans, the use of Self-Insured Plans or partial self-insurance makes a great deal of sense. There can be cash flow advantages, exemptions from state-imposed benefits and insurance laws, and substantial savings. Self-insurance is frequently seen in medical, dental, vision care and short-term disability benefits.

Employers must be careful of the term self-insurance. It may be referring to those specific plans that are only partially self-insured. In those cases, there should be some level of stop-loss insurance. Recommending and establishing a self-funded benefits plan for any employer requires a comprehensive understanding of all the risks and rewards.

High Deductible Health Plans (top)

A High Deductible Health Plan is typically combined with one of two tax-advantaged spending accounts – a Health Savings Account or a Health Reimbursement Arrangement. Plan members use money from their spending account to pay for medical care, including prescription drugs; and it functions like a traditional major medical plan after the deductible has been met.

A properly administered plan HDHP creates cost-efficiency, since businesses that specialize in the administration of specific coverage can be extremely effective in the management of claim costs.