Choosing a health insurance plan for your company is an important decision. Survey after survey has confirmed that health insurance is THE most important benefit that employees consider when deciding whether to start a new job or stay with a current job. So don’t just choose one on a whim – make sure you consider the following factors when choosing a health plan for your employees.
1. Type of Plan
There are three different types of health plans:
- Defined benefit plan – This is what we consider “traditional” health insurance, where the employer provides coverage through a group plan.
- Defined contribution plan – As opposed to offering an insurance plan, the employer offers an allowance and employees choose a plan that suits their needs.
- Professional employer organization (PEO) – Smaller employers can join a PEO to provide benefits, but at large group rates, which means it’s less expensive for everyone.
If you choose to offer a defined benefit plan, there are still decisions to be made. An HMO, health maintenance organization, will lower costs but limit your employees’ healthcare options. A PPO, preferred provider organization, offers more options but higher premiums. An EPO, exclusive provider organization, is a mixture of HMOs and PPOs – employees have to stay within a defined network, but don’t need a referral to see a specialist. (See here for more information regarding the different types of coverage.)
2. Your Employees
Generally speaking, younger employees tend to have less medical problems than older ones. In this case, you might opt for a plan with lower premiums and higher deductibles. Also assess what types of healthcare might be important to them – dental, mental health, maternity coverage, coverage for dependents, etc.
As a company leader, you obviously need to keep the company’s best interests in mind; at the same time, you don’t want to offer a health plan that is terribly expensive. You need to find some sort of middle ground. So bear in mind: cost of the plan, deductibles, how much the company will pay, how much employees will have to contribute, and if your choice places unnecessary burdens on either party.
Coverage is all about the details. When choosing a plan, make sure to read the fine print, which will include exactly what conditions are covered, when coverage does not apply, when reimbursement will be granted (and how much), and whether any restrictions apply (such as out-of-state medical expenses).
5. The competition
This is probably not the first thing you think about when it comes to health insurance, but it’s important to know what your competitors are offering. This will let you gauge what your employees/potential employees are expecting. If you can’t match exactly what your competitors are offering, you can try to add different incentives that will appeal to employees.
Consider Hiring a Consultant
Navigating your health care options is not an easy task; there are so many options with many nuanced differences. Hiring a consultant is a good option to make the best choice for your company. Corporate Financial has over 20 years of experience in the employee benefits industry, and we would be happy to guide you in your selection. Contact us today!