Open Enrollment: Health care plan basicsSubmitted by Financial Planning Solutions, LLC on November 29th, 2018
Generally once a year employers do two things: Select new health care providers and conduct employee enrollment meetings.
Rising employer costs are driving employers to look at and often change their company-provided health insurance providers almost every year. When this happens, employees have a new set of options and plans to consider. The result is often employee confusion, discouragement and indifference.
To help you sort this out, here’s a quick rundown of the two major types of plans: pre-paid and post-paid.
With pre-paid health plans health care providers are paid in advance for providing services. HMOs (health maintenance organizations) are pre-paid plans. HMOs typically cover more health services than post-paid plans but they tend to have fewer deductibles and lower co-payments. HMOs are also supposed to emphasize preventative maintenance services and control costs better than post-paid plans.
However, HMOs require the employee to receive care through the HMO’s designated list of providers. Traditionally HMOs have been a lower cost option. HMOs can be attractive to employees that can be flexible and often are not using health services.
Post-paid health plans reimburse the patient or employee after services have been provided. These plans offer the employee a wide range of options in terms of who provides health services and where those services are provided. This plan type can be attractive to employees that want to choose their own doctors or specialists and the hospital where they receive care.
However, such plans typically require careful tracking of health care expenses and portions of these expenses may require the patient to cover part or most of the cost. Overall, premiums can be higher vs. HMOs because there usually are few, if any, limits on who is providing care.
High Deductible Health Plans
Just to make matters more confusing, High Deductible Health Plans are becoming an increasingly popular option. This plan type must be paired with a Health Savings Account (HSA). High Deductible plans require the employee to pay more out-of-pocket for health services, e.g., up to the deductible limit, before insurance kicks in.
A high deductible health plan must have a deductible of at least $1,350 (individual) or $2,700 (family) and maximum out-of-pocket amounts of $6,750 (individual) and $13,500 (family).
HSA Contributions - An individual or employer can contribute up to $3,500 (individual) or $7,000 (family) into an IRA-style account. Funds in the account are contributed pre-tax and can be used for qualified health care expenses now or in the future.
Employers and employees are finding HSAs attractive because insurance premiums are among the lowest across pre- and post-paid plans. Generally, younger employees and employees that are healthy and use limited health care services tend to find HSAs paired with a high deductible plan to be most beneficial.
Have questions about your health plan options? Give us a call; we’re here to help.
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