|
 This Health Insurance Guide Is for You
As a small business owner, you might think that offering health insurance coverage to your employees is beyond your reach, but it may be easier than you realize. This Guide is intended to help you find out.
Many employers like you have decided that providing a health insurance benefit to their employees is a sound business decision. Here are just some of the reasons:
➣ Offering health insurance helps attract and retain high-quality, key employees. The U.S. Department of Labor estimates that, on average, recruitment and employee turnover in small businesses account for 30 percent of salary costs.
➣ Evidence shows that insured persons are healthier, and better health increases worker productivity, which can enhance a company’s performance.
➣ The health insurance premiums your company pays are fully tax-deductible and are non-taxable income for employees.
➣ Health insurance provides workers and their families with protection from catastrophic financial losses that can accompany serious illness or injury.
This Guide explains the key concepts you need to understand to make an informed decision about health insurance for your company, or, if you are selfemployed, for yourself. It answers questions such as: How much does health coverage cost? What types of insurance plans are available to my company? What if an employee or dependent has a pre-existing medical condition?
Download Guide to Health Insurance Options for Small Businesses
PDF format, 278KB, 14Pages.
Produced under the guidance of and with support from the
Healthcare Leadership Council
www.hlc.org
The Cover the Uninsured Week Small Business Working Group
America's Health Insurance Plans
Blue Cross and Blue Shield Association
Healthcare Leadership Council
The Robert Wood Johnson Foundation
U.S. Chamber of Commerce
This guide was prepared with assistance from Health Policy Consulting, LLC.
Small Business Health Insurance
Small business employees are much less likely to have access to employer-sponsored health coverage than the employees of larger firms.
Online Health Insurance
As with the travel and real estate industry before it, the health insurance market is being transformed by technology and the Internet. But it's not just convenience that has driven more consumers to go online for their individual health insurance coverage. For more and more Americans, it's becoming a matter of necessity.
CONTENTS
2 THIS HEALTH INSURANCE GUIDE IS FOR YOU
2 IMPORTANT FACTS ABOUT HEALTH INSURANCE
3 UNDERSTANDING THE BASICS: WHAT SMALL BUSINESSES NEED TO KNOW ABOUT HEALTH INSURANCE
3 Do insurance companies have to sell health insurance to my small business?
3 What are my options if I am self-employed? Is this Guide useful to me?
3 What tax advantages are available to me and to my employees if I purchase insurance for my company?
4 What tax advantages are available to an individual who purchases insurance in the individual market?
4 What types of insurance plans are available to my company?
4 How much does health coverage cost?
5 What is employee cost sharing?
5 What is provider choice?
5 Box: How to Estimate the Full Costs of Medical Care: A Simple Illustration
6 How much do plans vary with respect to the benefits they offer?
6 What is the relationship between premiums, employee cost sharing and provider choice?
6 ALTERNATIVES TO TRADITIONAL INSURANCE
6 What about purchasing insurance through a professional or trade association?
7 BEYOND PERFECT HEALTH: YOU DO HAVE OPTIONS IF AN EMPLOYEE OR DEPENDENT IS ILL
7 What if an employee or dependent has a pre-existing medical condition?
7 Chart: Relationships Between Plan Types, Premiums, Employee Cost Sharing and Provider Choice
8 Chart: Comparisons of Other Health Benefit Options
9 If I find group coverage unavailable or unaffordable, are there any other options available to my employees, our dependents and me?
9 CONSUMER PROTECTION: OVERVIEW OF FEDERAL AND STATE HEALTH INSURANCE REGULATIONS
9 What should I know about federal protections, laws, regulations and resources when purchasing insurance?
10 What should I know about state protections, laws, regulations and resources when purchasing insurance?
11 GLOSSARY
GLOSSARY
Association-sponsored plans
Professional or trade associationsponsored plans allow small business owners to purchase health insurance for their employees through membership in business, trade or professional organizations.
COBRA
The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) is a federal law allowing employees and their dependents to continue participation in an employer-sponsored group health plan for a limited period (generally 18 months) after employment ends. Participants pay the full premiums associated with the plan, plus 2 percent to cover administrative costs.
Coinsurance
Coinsurance is the percentage of a medical bill that an insured person must pay, after deductibles and/or co-pays are met. While coinsurance is commonly 20 percent, it can be as little as zero or as much as 50 percent (for out-of-network services, for example).
Co-payment
A co-payment, or co-pay, is a fixeddollar amount insured persons pay each time they seek care or purchase covered items, such as office visits or prescription drugs. Co-pays sometimes apply to inpatient hospital stays. Health plans usually have separate co-pay requirements for prescription drugs.
Deductible
A deductible is the amount that insured persons must pay for covered services before medical expenses are paid by the health plan. Some plans have separate deductibles for pharmacy benefits.
Employee cost sharing
Employee cost sharing refers to the portion of health insurance costs—above and beyond the premium contribution— that employees are expected to pay out-of-pocket. Employee cost sharing expenses include deductibles, co-payments and coinsurance.
FSA
A flexible spending account (FSA) is funded by the employee from pre-tax income and is used to pay for medical expenses. The entire annual amount of an FSA must be made available to the employee at the beginning of the year. However, unspent balances must be forfeited to the employer at the end of the year.
Guaranteed issue
Federal law prohibits insurance companies from denying health coverage to small businesses (usually defined as 2 to 50 employees) on the basis of health status or other factors related to the use of health care. Guaranteed renewability Federal law prohibits insurance companies from canceling a business’ insurance because someone in the firm becomes sick.
High-risk pools
In some states, high-risk pools provide a health insurance option for individuals whose poor health creates a barrier to obtaining employer-based coverage. Premiums in high-risk pools are relatively high, and there is often a waiting period. However, many states have nondiscrimination laws that eliminate the need for these pools.
HIPAA
The Health Insurance Portability and Accountability Act (HIPAA) of 1996 is a federal law that includes important health insurance provisions, including nondiscrimination, guaranteed renewability, guaranteed issue and limits to benefit exclusions due to pre-existing medical conditions.
HMO
A health maintenance organization (HMO) is an insurance plan that requires a person to get care from providers who are part of the HMOs network. Usually, a primary care provider coordinates care and controls access to specialists. Most HMOs offer a point-of-service (POS) option for additional fees.
HSA
A health savings account (HSA) is an alternative to traditional insurance coverage. HSAs must be paired with a high-deductible health insurance policy, the contribution to which is taxdeductible. HSA funds may be used to pay out-of-pocket costs (deductibles, coinsurance, co-pays). The employer, the employee or both may fund the plan. HSA accounts are owned by the employee, are fully portable and remaining balances roll over year to year.
HRA
A health reimbursement arrangement (HRA) is an alternative to traditional insurance coverage. HRAs are usually paired with a high-deductible health insurance policy, the contribution to which is tax-deductible. HSA funds may be used to pay out-of-pocket costs, including deductibles, coinsurance and co-pays. The employer must fund the HRA, and consequently may decide if benefits are portable or if they roll over from year to year.
Maximum out-of-pocket expenditures
This out-of-pocket limit is the maximum amount of cost sharing an insured individual or family would have to pay in a given year. Once a maximum out-ofpocket limit is reached, the insurer pays all additional covered medical expenses for the year, up to the plan’s limit.
Medical underwriting
Medical underwriting is a pricing practice used by insurance companies to adjust premiums (usually upward) based on a group’s health status or medical claims experience.
Nondiscrimination
Neither insurers nor employers are permitted to condition eligibility of employees and their dependents on their health status.
Open access plan
An open access (OA) plan is an HMO or POS plan in which patients are allowed to self-refer to specialists for a higher co-pay.
Point-of-service
A point-of-service (POS) plan is an option added to many HMOs allowing enrollees to seek care outside of the HMOs network for a higher co-pay and, possibly, a higher premium.
PPO
A preferred provider organization (PPO) is an insurance plan that encourages enrollees to get care from providers within the plan’s network, but allows access to providers outside the network if one is willing to pay more. Many PPOs do not require the insured person to choose a primary care doctor or get a referral to see a specialist.
Pre-existing medical condition
Pre-existing medical conditions, such as asthma, diabetes or cancer, may increase the cost and, in some cases, the availability of insurance, subject to federal and state laws and a carrier’s policies.
Premiums
The premium is the amount an insurance plan costs per month. Premiums may vary as a function of market conditions, plan types, health status of enrollees, number of enrollees and degree of employee cost sharing. Typically, the employer and employee each contribute to the premium payment.
Provider choice
Different plan types (HMOs, PPOs, POS plans and OA plans) vary with respect to the degree of choice enrollees have as to which doctors or other health care providers they wish to see. HMOs have the least provider choice, as they require participants to see professionals only within the plan’s relatively narrow network, whereas PPOs tend to have broader networks of preferred providers and allow access to non-network providers, but at a higher cost.
Rate-up
A rate-up is the extent to which premiums are increased, usually annually. Premium rate-ups are typically expressed as a percentage increase. For example, a premium that increases from $1,000 per year to $1,100 per year has a rate-up of 10 percent.
 |
eBook Categories 
Subscribe to the RSS feed.