HMO Health Insurance Plans
An HMO gives you access to certain doctors and hospitals within its network. A network is made up of providers that have agreed to lower their rates for plan members and meet quality standards. Unlike PPO plans, care under an HMO plan is covered only if you see a provider within that HMO’s network. There are few opportunities to see a non-network provider. There are also typically more restrictions for coverage than other plans, such as allowing only a certain number of visits, tests, or treatments.
Key points about HMOs:
Some HMO plans require that you…
- …select a primary care physician (PCP), who will determine what treatment you need.
- …get a PCP referral to be covered when you see a specialist or have a special test done.
- …pay the entire cost of medical services if they are provided by an out-of-network provider.
Premiums are generally lower for HMO plans, and there is usually no deductible or a low one.
Some HMO plans don’t require you to select a PCP or have a referral to see a specialist.
PPO Health Insurance Plans
PPO plans provide more flexibility when choosing a doctor or hospital. They also feature a network of providers, but there are fewer restrictions on seeing non-network providers. In addition, your PPO insurance will pay if you see a non-network provider, although it may be at a lower rate.
Key features of PPOs:
- You can see the doctor or specialist you’d like without having to see a PCP first.
- You can see a doctor or go to a hospital outside the network, and you may be covered. However, your benefits will be better if you stay in the PPO network.
- Premiums tend to be higher, and it’s common for there to be a deductible.
HMO Versus PPO: Plan Comparison
As mentioned above, differences between HMO (Health Maintenance Organization) and PPO (Preferred Provider Organization) plans include network size, ability to see specialists, costs, and out-of-network coverage. Compared to PPOs, HMOs premiums are lower. PPOs generally offer greater flexibility in seeing specialists, have larger networks than HMOs, and offer some out-of-network coverage.
A defining feature of HMO and PPO plans is that they both have networks. Networks are one way to lower health care costs – network providers agree to give discounts in exchange for access to a health plan’s members. This saves health insurers money, but it also saves health plan members money as well, and savings for the insurer can translate to lower premiums, deductibles and copays. In general, PPO networks tend to be broader, including more doctors and hospitals than HMO plans, giving you more choice. However, networks will differ from insurer to insurer, and plan to plan. Your NEU professional will do the research and guide you as you make the decision that is the ideal fit for your needs.
Primary Care Physicians (PCPs)
Most HMOs will require you to select a primary care physician, who will be the primary point of contact for your medical care. Your PCP will determine what treatments you need and will refer you to specialists if he or she determines specialized care is medically necessary. Costs for specialists will not be covered without a PCP referral. In contrast, PPOs tend not to require selection of a PCP, and you can usually see a specialist without a referral, and still have these costs covered.
Coverage for Out-of-Network Care
For both PPO and HMO plans, your costs for care will be lowest if you receive it from in-network providers. The two types of plans differ considerably in coverage for services from providers outside the plan network. For HMOs, out-of-network services are usually not covered at all, except for emergencies. PPOs differ from HMOs in that PPO plans will usually provide some coverage for these types of services, but coverage for in-network providers will be much better.
The additional coverage and flexibility you get from a PPO means that PPO plans will generally cost more than HMO plans. When we think about health plan costs, we usually think about monthly premiums – HMO premiums will typically be lower than PPO premiums. Another cost to consider is a deductible. This is the amount of health care costs you must pay before your plan begins to cover your costs. Not all HMOs have deductibles, but when they do, they tend to be lower than PPO deductibles.
Level Funded Plans
A level funded health plan (also known as a partially self-funded plan) is a type of health insurance plan where the employer takes on more of the risk.
With a fully-insured plan, premium goes to an insurance company for coverage and all the risk and reward is transferred to the insurance company. Level funded health plans can be understood by looking at what’s under the hood:
Administrative Costs — These costs are fixed and charged per employee per month. They will remain the same regardless of claims. This is the cost employers pay fees for network access, third party claims administration, prescription network, and broker fees.
Claims Fund — This is the variable portion of level funded health plans, but also where the most cost savings potential lies. As with a fully insured plan, the insurance carrier estimates what they think claims will cost for the particular group over the course of a plan year and the employer agrees that he will fund this amount into a claims fund. The difference with level funded health plans is that if the claims are lower than expected, the insurance company will refund part or sometimes, all the unused funds back to the employer.
Stop Loss Coverage — This limits the risk exposure of the employer and covers the entire workforce’s claims for the plan year. This acts like an umbrella policy protecting the employer from any claims that are higher than what he has agreed to fund. If together, your employees incur enough claims that they reach the aggregate stop loss deductible the reinsurance kicks in and reimburses the employer for claims. This allows the employer to quantify his cost before committing to the plan just as is done for a fully insured plan.
Benefits of Level-Funding
The most attractive allure to the small business owner is obviously cost. If a group is relatively healthy, level-funded solutions provide the opportunity to save hard dollars up front and in with low claims utilization, residual cost savings in years down the road. How? After fixed costs, a portion of any unused claims money remaining in the claims account at the end of the plan year and runout period goes back to offset next year’s plan cost.
Fully Insured vs. Self-Insured (Self-Funded) Health Plans
A fully insured health plan is the more traditional way to structure an employer-sponsored health plan. With a fully insured health plan:
- The company pays a premium to the insurance carrier.
- The premium rates are fixed for a year, based on the number of employees enrolled in the plan each month.
- The monthly premium only changes during the year if the number of enrolled employees in the plan changes.
- The insurance carrier collects the premiums and pays the health care claims based on the coverage benefits outlined in the policy purchased.
- The covered persons (e.g.: employees and dependents) are responsible to pay any deductible amounts or co-payments required for covered services under the policy.
- With a self-insured (self-funded) health plan, employers (usually larger) operate their own health plan as opposed to purchasing a fully insured plan from an insurance carrier. Employers choose to self-insure because it allows them to save the profit margin that an insurance company adds to its premium for a fully insured plan. However, self-insuring exposes the company to much larger risk if more claims than expected must be paid. With a self-funded health plan:
- There are two main costs to consider: fixed costs and variable costs.
- The fixed costs include administrative fees, any stop-loss premiums, and any other set fees charged per employee. These costs are billed monthly by the TPA or carrier and are charged based on plan enrollment.
- The variable costs include payment of health care claims. These costs vary from month to month based on health care use by covered persons (e.g.: employees and dependents).
- To limit risk, some employers use stop-loss or excess-loss insurance which reimburses the employer for claims that exceed a predetermined level. This coverage can be purchased to cover catastrophic claims on one covered person (specific coverage) or to cover claims that significantly exceed the expected level for the group of covered persons (aggregate coverage).
Variations of Self-Insured (Self-Funded) Health Plans
In addition to the types of self-insured health plans discussed above, there are variations of self-insured health plans that help employers reduce the cost of health insurance:
- A Partially Self-Insured Health Plan, with an Integrated HRA. One variation of a partially self-insured health plan is to raise the deductible on the group health insurance plan and self-insure the difference with an integrated Health Reimbursement Arrangement (HRA). For example, the company increases the deductible from $500 to $5,000. The company uses an HRA to reimburse employees for up to $4,500 (the difference in the deductible). Using the HRA in this way, the employer is self-insuring the $4,500 additional deductible and seeing costs savings because most employees won’t reach their $5,000 deductible.
- A Self-Insured Reimbursement Plan: Another variation is a self-insured reimbursement plan, such as a Health Reimbursement Account (HRA). Many employers (usually smaller and mid-sized) set up a Small Business HRA to reimburse employees both for individual health insurance premiums and qualified medical expenses – instead of offering a group health plan or an Integrated HRA. A Small Business HRA is not health insurance; rather, it is a way to contribute toward an employee’s health insurance and medical costs without administering a traditional, one-size-fits-all group policy.
Telemedicine allows patients to communicate with a healthcare provider using technology, as opposed to physically visiting a doctor’s office or hospital.
With telemedicine, you can discuss symptoms, medical issues, and more with a healthcare provider in real time using video, online portals, and email. Using telemedicine, you can receive a diagnosis, learn your treatment options, and get a prescription. In cases where it’s necessary, healthcare providers can even monitor readings from medical devices remotely to keep an eye on your condition.
Three common types of telemedicine:
- Interactive medicine: Also called “live telemedicine,” this is when physicians and patients communicate in real time.
- Remote patient monitoring: This allows caregivers to monitor patients who use mobile medical equipment to collect data on things like blood pressure, blood sugar levels, etc.
- Store and forward: Providers can share a patient’s health information with other healthcare professionals or specialists.
Individual health insurance plans often do not provide dental coverage, which makes offering dental insurance coverage a highly attractive employee benefit.
The 4 main types of dental insurance coverage are:
- Dental Health Maintenance Organizations (DHMOs): Like a health maintenance organization, a DHMO often requires the use of a primary care dentist. Patients must generally see dentists within the DHMO network to receive coverage.
- Preferred Provider Organizations (PPOs) or Participating Dental Network (PDNs): Dental patients in a PPO or PDN may generally see any licensed dentist. However, patients pay lower costs for choosing a dentist within the PPO or PDN network.
- Dental Point of Service (POS) Plans: Patients in a dental POS plan have the choice of seeing an in-network or out-of-network dentist. However, out-of-pocket costs are usually greater for out-of-network treatment.
- Dental Indemnity Plans: Dental indemnity plans permit patients to see any licensed dentist. Patients pay a deductible and sometimes copayments or coinsurance for this coverage.
Individual health insurance plans often do not provide vision coverage, which makes offering vision insurance coverage a highly attractive employee benefit.
3 Vision Insurance Coverage Options:
- Health Maintenance Organization (HMO): HMOs often require the use of a primary care vision professional. Patients must generally see vision professionals within the HMO network to receive coverage.
- Preferred Provider Organization (PPO): Vision patients in a PPO may generally see any licensed vision professional. However, patients pay lower costs for choosing a vision professional within the PPO or PDN network.
- Vision Indemnity Plan: Vision indemnity plans permit patients to see any licensed vision professional. Patients pay a deductible and sometimes copayments or coinsurance for this coverage.
Voluntary Employee Benefits
Have you considered adding voluntary supplement insurance to your employee benefit package? Offering these products to your employees is one way you can let them know that you truly care about their wellbeing. In competitive industries, offering such benefits can help with employee acquisition, loyalty, and retention.
Our broad voluntary supplement product portfolio offers payment through payroll deduction at affordable rates. These individual worksite (payroll) products include:
- Universal Life Insurance – Only 41 percent of adult Americans have individual life insurance. Many rely on group insurance, leaving them vulnerable if they lose a job. Universal Life Insurance enables employees to prepare for their family’s future without straining the budget. While fund values accumulate, the policy owner is protected by immediate life insurance coverage. It combines the lower-cost protection of term insurance with a fund value feature. The flexibility of Universal Life allows for changes in the death benefit or premium amount depending on the life insurance needs and goals of the individual. Income tax-free death benefit paid to a beneficiary the insured designates. Lastly, beneficial “fund value” (tax-deferred) interest earned off the premiums paid may accumulate value over time and policy loans are available with a guaranteed minimum interest rate. Benefits for an employer offering Universal Life insurance would be there is no employer contribution required, no government reporting required, reduces pressure to provide expensive post-retirement life insurance benefits, and non-threatening method to promote employee participation in funding future benefits.
- Disability Insurance – A substantial majority-58%- of working adults believe they are covered by disability insurance, but only one-third of workers nationwide are covered. If your employees are like the rest of us, they probably don’t have much cushion for the unexpected disability. Voluntary short term disability coverage provides a monthly benefit to help replace lost income when an off-the-job injury or sickness prevents an employee from working. A disabling injury or sickness can happen at any time. Voluntary policies can help, by providing a source of income during a period of disability. Disability coverage helps offer peace of mind when an employee is injured or sick and cannot work.
- Hospital Indemnity Insurance – Health Insurance helps pay the costs of medical treatments, but most plans offered today don’t pay all of the costs required for an extended stay in the hospital. Hospital Indemnity insurance helps employees solve the dilemma of ever rising costs of hospitalization, co-insurance and deductible responsibility, while keeping out-of-pocket cost affordable. Hospital Indemnity might be right for employees who couldn’t afford the extra costs that come with hospitalization, have postponed hospital treatment because of the pressure the out-of-pocket costs would place on their budget, don’t have an emergency fund to cover their medical insurance deductible and co-payment amounts, or have a family they would like to keep financially secure, in illness and in health.
- Accident Insurance – An accident can wreak havoc on an employee’s savings if they are not prepared. On average there are 13 unintentional-injury deaths and about 2,650 disabling injury every hour during the year. Accident Insurance provides protection for your employees and their families against expenses associated with accidental injury. Although one does not plan their next accident, your employees can plan protection against the high costs often associated with accidental injury and death. Accident Insurance might be a good fit for an employee who a few weeks off work would make it hard to keep up with bills, couldn’t afford the extra costs that come with an injury, or might have regular debts—like credit cards, a car payment, mortgage, or other loans.
- Cancer Insurance – According to the American Cancer Society, men have slightly less than a 1 in 2 lifetime risk of developing cancer; for women, the risk is a little more 1 in 3, roughly 65% of cancer-related costs are indirect, and are not covered by health insurance. Cancer can result in significant out-of-pocket costs for non-reimbursed expenses such as travel, lost wages, special diets, in home care, deductibles, co-pays, etc. Benefits are paid directly to the insured unless benefits are assigned. Cancer insurance might be right for employees who want to seek the very best treatment regardless of cost, have a family history of cancer, have experienced the excessive costs of cancer treatment, or don’t have much money set aside for the unexpected.
- Critical Illness Insurance – It is probably crossed the minds of your employees that someone in their family may need treatment for a critical illness someday. You may want to consider the following: cardiovascular disease continues to be the major cause of death in the U.S., and claimed over 870,000 American lives in 2004. Over 150,000 people died from stroke in 2004. When considered separately from other cardiovascular diseases, stroke ranks as the third leading cause of death, behind diseases of the heart and cancer. Stroke is a leading cause of serious, long-term disability in the United States. One in 10 persons over 65 and nearly half of those over 85 have Alzheimer’s disease. Rare, inherited forms of the disease can strike individuals as early as their 30’s and 40’s. Critical Illness provides a simple lump sum benefit based upon the diagnosis of a specified critical illness. Your employees could also choose Individual, Single Parent Family, or Family Coverage.
- Voluntary Term Insurance – Millions of Americans have no life insurance coverage. Nearly one third of Americans have no coverage at all with almost 75% of Americans agree that life insurance is the best way to protect against premature death of a primary wage earner. Many U.S. households are not prepared for the death of a primary wage earner. Twelve percent of households would immediately have trouble meeting everyday living expenses, and another 15% would have difficulty keeping up with expenses after several months. Term Insurance provides Inexpensive yet Valuable Life Insurance Protection with level death benefits. Coverage amounts starting as low as $25,000 with family coverage available, and portable coverage that stays with the insured, no matter where he/she works or lives as long as the premiums are paid. Term insurance might be right for employees who are the primary wage earners in their families, have families that would have trouble meeting living expenses without their income, have regular debts—like credit cards, a car payment, mortgage, or other loans, or have children under 18.
Gap Health Insurance is a group supplemental health plan that works along with a high-deductible major medical plan. The IRS defines a High Deductible Health Plan (HDHP) as a plan having a deductible of at least $1,300 for an individual, and $2,600 for a family. As the name implies, gap insurance helps pay for medical costs that occur before reaching the deductible, which has led to people calling it “insurance on insurance”.
By raising the deductible on the major medical plan, you will see the biggest impact. Gap Plans have been growing in popularity as a solution to reduce overall out-of-pocket costs and supply better access to healthcare. With the changes brought on by the Affordable Care Act, insurance premiums and health coverage deductibles are on the rise. It is important to note that gap health insurance is not major medical nor ACA compliant. It is a supplemental policy.
Gap Health Insurance Coverage
A medical gap insurance plan is simple in that it follows an employer’s major medical plan. It pays off the underlying major medical plan’s Explanation of Benefits (EOB) directly to the subscriber or provider. A gap plan pays the benefits described in the Schedule of Benefits up to a maximum benefit amount. These plans may have a supplemental deductible or coinsurance (out of pocket) which the subscriber must meet prior to plan reimbursement.
A medical gap plan pays the amount applied to the insured’s major medical deductible and coinsurance. It covers the same expenses as the major medical plan except for charges for professional fees in a doctor’s office or medical clinic, outpatient prescription drugs, vision, dental, and plan copayments.
Legal Plans offers easy access to the legal help you need for the common legal issues many people face. The legal plan is built around your needs and offers you:
- An Experienced Attorney Network: You have access to the largest attorney network available, as well as the option to use an attorney outside of our network and be reimbursed for part of the costs.
- Access to Digital Tools: We provide a simple, guided process for employees to complete wills, living wills, durable power of attorney documents, and living trusts, all online in as a little as 15 minutes.
- Comprehensive Coverage: With over 100 legal matters covered under our plan, you can see attorneys as many times as you need to throughout the year.
HSAs, FSAs & HRAs
To help employees manage health and dependent care costs, many employers offer Health Savings Accounts (HSAs), Flexible Spending Arrangements (FSAs), or Health Reimbursement Arrangements (HRAs) as part of their benefits package. Learn the key features and benefits of each account in this section.
An HSA is a savings account that enables an employee to pay and save for health care expenses in a tax-advantaged way. Used in conjunction with a High Deductible Health Plan (HDHP), an HSA may receive contributions from any person, including the employer.
There are generally two main types of FSAs: health FSAs and dependent care FSAs. A Health FSA allows employees to be reimbursed for medical expenses in a tax-advantaged way without having to be enrolled in an HDHP. A dependent care FSA reimburses employees for certain dependent care expenses in a tax-advantaged way. FSAs are usually funded by employees, but employers can contribute to them as well.
There are various types of HRAs. All are funded solely by employers to help employees pay for medical expenses on a tax-free basis. However, there are specific plan design rules for each.
- Employee contributions toward cafeteria plan benefits are made pre-tax.
- Employer contributions toward an employee’s cafeteria plan benefits are not taxed.
Requirements for an employer satisfy to establish a cafeteria plan
To establish a valid cafeteria plan, employers generally must:
- Adopt a written plan document that governs plan administration.
- Satisfy certain nondiscrimination requirements related to benefits and contributions provided.
- Make employee plan elections irrevocable unless permitted by law.
Types of cafeteria plans
- Full flex plans: Employers make contributions for all plan-eligible employees, and employees use those contributions to buy various benefits. Employees can then make pre-tax contributions toward any benefit that the employer contributions do not fully cover.
- Premium-only plans (POPs): Employees can choose between receiving their full salary in cash or using a share of that salary to pay group insurance policy premiums on a pre-tax basis.
- Simple cafeteria plans: These plans generally provide employers with 100 or fewer employees a safe harbor from certain plan nondiscrimination requirements in exchange for contributing toward each eligible employee’s benefits.
- Flexible spending arrangements (FSAs): Employees are allowed to make contributions toward health care and dependent care expenses on a pre-tax basis.
Benefits that can be offered in a cafeteria plan
To elect cafeteria plan benefits, the employee must enter into a salary reduction agreement with the employer, in which the employee agrees to contribute a portion of his or her salary on a pre-tax basis to pay for benefits. This must be done during the employer’s annual open enrollment period.
Changing employee cafeteria plan elections
Unless specifically permitted by the plan changes must be made only during the open enrollment period. Employers may allow employees to make election changes outside of open enrollment due to changes in their:
- Marital status
- Employment status
- Number of dependents
- Medicare entitlement
- Job descriptions, advertisements, and interviews are ADA compliant and meet state nondiscrimination requirements related to disability.
- Employment applications comply with state laws about prohibited interview statements.
- All interview questions are appropriate and relate directly to the position and the applicant’s ability to perform the job’s essential functions. Questions do not discriminate based on race, sex, religion, age, ethnic group, national origin, marital status, military service, disability, or any other protected status.
- Written authorization is obtained for background checks, and Fair Credit Reporting Act requirements are satisfied, along with state requirements for conducting background checks.
- Policies and procedures related to drug testing, use of arrest and conviction records, and other candidate-information requests comply with federal and state law.
- All recruitment and hiring strategies, policies, and procedures comply with federal and state nondiscrimination laws.
- Job offer letters are reviewed by an HR specialist or employment law attorney and include a statement regarding employment at-will.
- Forms I-9 are completed for all new employees within 3 business days from the first day of work for pay.
- New hire reporting requirements are satisfied, and necessary tax forms (Form W-4 and any required state forms) are collected from new employees.
- Orientation and onboarding programs are ready for welcoming new employees and familiarizing them with your basic management practices.
- Employees are properly classified as exempt or non-exempt based on their specific job duties and compensation. (Note: Job titles alone do not determine an employee’s exempt or non-exempt status.)
- All pay practices, including minimum wage and overtime compensation comply with the Fair Labor Standards Act and related state laws.
- Employee pay periods (weekly, bi-weekly, semi-monthly) are scheduled in accordance with state wage payment timing requirements.
- Pay and incentive programs treat employees equitably, and decisions about promotions and merit raises are based on clear, objective criteria.
- Independent contractor relationships are carefully reviewed to prevent misclassification.
- Employee benefit plans (medical and retirement) comply with all requirements under federal and state law, including Health Care Reform notices and other requirements for group health plans.
- All plan documents, including enrollment forms and employee communications, are accurate, consistent, and legally compliant.
- Summary plan descriptions (SPDs) and other benefit plan notices are distributed to employees as required under federal and state law.
- All reporting and filing requirements for medical and retirement benefits are satisfied.
- Employees are provided required notices about continuation of health coverage under COBRA or state “mini-COBRA” laws, and all obligations for continuation coverage are fulfilled.
- Policies and procedures on paid vacation, holidays, and sick leave are reviewed on a regular basis (including for compliance with FMLA or similar state laws), along with other benefits offered, such as flextime and telecommuting.
- Information about benefits is clearly communicated to employees, and policies and procedures for benefits are applied fairly and consistently.
Employee (Policies & Proceducers)
- All company policies and procedures comply with federal and state labor laws on employee leave, equal employment opportunity, sexual harassment, worker safety, and other requirements.
- Every employee is provided a handbook explaining company policies and procedures for standards of conduct, nondiscrimination, benefits, and other terms and conditions of employment. (Be sure employees sign a receipt acknowledging that they have reviewed the handbook.)
- Labor law posters required to be displayed under federal and state law are posted where employees can easily see them.
- Procedures are in place for maintaining employee records and files as required by law, including for designating the information to be collected, confidentiality, and how long to keep records. Medical records and other confidential documents are kept in a separate file from personnel files.
- Employees receive necessary skills and regulatory training, including training on safety and sexual harassment.
- Human resources policies and procedures apply equally to all employees and are applied fairly and consistently throughout the company.
- Performance reviews are conducted for all employees on a regular basis.
- Job expectations and responsibilities are clearly communicated to employees, including the conduct and results required and the performance standards by which they will be measured.
- Systems for measuring performance are in place (e.g., number of sales or customer satisfaction), based on specific job-related functions and criteria set forth in the employee’s job description.
- Employee job descriptions are reviewed and updated at least annually.
- Accurate documentation regarding performance is kept for each employee and documentation is direct, factual, and detail-oriented to support disciplinary or other personnel decisions.
- Employee performance reviews are based upon specific, job-related criteria, and feedback provided is factual and complete.
- Performance is compared against job descriptions and goals.
- The review process and systems for measuring performance treat employees equitably.
Employee Discipline & Termination
- Policies and procedures for handling employee disciplinary actions and investigations are clearly defined, written, and communicated to employees.
- All matters involving employee discipline warnings, investigations, and terminations are carefully and accurately documented, and related notices are reviewed on a regular basis.
- Termination meetings are conducted to inform the employee of the termination, discuss return of company property, deliver the employee’s final paycheck, and facilitate the employee’s departure. A summary of the meeting and any related information is prepared and placed in the employee’s personnel file.
- Departing employees are provided with a written summary of accrued benefits and notices about post-termination benefits, including, where applicable, compensation for vacation and sick time, continuation of health coverage, severance pay, and 401(k) plan information. Be sure to comply with any applicable federal or state requirements.
- Policies are in place for collecting keys and other company property from the terminated employee and confirming that access to computer systems, email, and voicemail is deactivated.
- Final paychecks are delivered at the time of termination, or as otherwise required by state law.
- Neutral references confirming a former employee’s position and dates of employment are available upon request in accordance with company policy.
- Discipline, investigation, and termination procedures comply with applicable federal and state laws and are enforced fairly and consistently.
Benefits Administration Platform
- A benefits administration platform is a software system that manages employer-sponsored benefits for employees—and, in some cases, can be managed by employees themselves. Not only do these systems streamline common HR administrative tasks, but they can automate eligibility for benefits, empower users to make benefits elections, and give users the opportunity to enroll in health insurance and ancillary options.