| Let me guess, you’re one of those, go-getting, | | | | PPO) |
| micro-business entrepreneurs or an old fashioned | | | | The not so infamous at as all that Preferred Provider |
| small business owner … and that means its up to | | | | Organization is very similar to the HMO, at least in |
| and you alone to decide whether or not you can | | | | terms of base concept. Group PPOs are just groups |
| provide a group health care plan to your close-knit | | | | of physicians and hospitals that contract with |
| workforce. These days, business owners in your | | | | employers, insurance companies, or third party |
| position need more than just health insurance for | | | | administrators to provide health care services at |
| themselves, the availability of group health has | | | | reduced fees. Like HMOs, PPOs may be structured as |
| become an essential recruiting selling point. Besides, | | | | group or individual practices. |
| it’s frankly in your best interest to be on a | | | | The primary differences between Group HMOs and |
| group plan rather than an individual plan. Group health | | | | Group PPOs play out as follows: |
| plans often have richer benefits and lower premiums | | | | · PPOs do not provide benefits on a prepaid basis |
| overall because of their “shared risk/shared | | | | but on a fee-for-service basis as services are |
| cost” structure. | | | | rendered. |
| Once you’ve made the decision to offer a group | | | | · Fees are usually subject to a schedule used by all |
| medical plan, you should be aware of the types of | | | | PPO participants. |
| health plans available and the many features and | | | | · Plan participants do not have to use the PPO |
| benefits they provide. There are many types of | | | | physicians or facilities. They can make a choice each |
| group insurance programs. However, I’ll only | | | | time health care is necessary. However, PPOs usually |
| focus on plans specifically designed to be | | | | have lower deductibles and lower co-payments. |
| comprehensive workforce oriented health care | | | | Lastly, The Self-Funded Group Medical Plan |
| solutions rather than those focused on specific | | | | The Self-Funded Plan involves an arrangement |
| medical issues. | | | | whereby the employer assumes all the responsibilities |
| This is all simpler than its sounds. You see, most | | | | and liabilities that an insurance company would |
| health insurance plans can be broken down into four | | | | normally assume. Basically, the employer is responsible |
| major categories … Comprehensive Major Medical, | | | | for payment of all claims. However, can problems |
| HMOs, PPOs and Self Funded Plans. | | | | arise if your workforce incurs substantial claims. |
| First Up, the Comprehensive Major Medical Plan | | | | Therefore, most self-funded group medical plans will |
| This type of group health policy will provide benefits | | | | be less economically feasible for small business groups |
| for expenses incurred by an employee for most | | | | but will work quite effectively for firms with |
| medical treatments. This includes benefits for | | | | medium-sized groups due to the reduced risk. |
| treatments in a hospital, for physician services in or | | | | There are various partially self-funded group health |
| out of a hospital, for treatments needed for the care | | | | plans that are more feasible for small groups. An |
| of accidental injuries, for treatments incurred during | | | | insurance company would underwrite this type of |
| pregnancy, and most other medical costs incurred | | | | plan. The employer would be responsible for the |
| from a "medically necessary treatment. | | | | co-insurance portion of the major medical plan, while |
| Here are the four riders that can traditionally be | | | | the employee is responsible for the appropriate |
| attached to comprehensive major medical plans: | | | | deductible. Traditionally, the co-insurance portion of a |
| · Prescription Drug Card - allows for small | | | | major medical plan is 80% of the $5,000 of medical |
| co-payment by employee when purchasing | | | | costs that exceed the deductible. The insurance |
| prescription drugs. | | | | company is then responsible for all amounts |
| · Supplemental Accident Benefits - provides first | | | | exceeding the deductible and co-insurance. |
| dollar coverage with no deductible for treatment of | | | | The total annual aggregate out-of-pocket expenses |
| accidental injuries. | | | | for the employer work out to be what the average |
| · Dental/Vision Benefits - provides insurance for the | | | | annual cost of a full-blown major medical plan would |
| specific cost of dental and optical treatments. | | | | be for the same group. Therefore, if a company has |
| · Skilled Nursing Care/Home Health Care - provides | | | | a fairly good health history, it may save some money |
| coverage for the cost of ongoing care in a skilled | | | | with a partially self-funded plan. |
| nursing facility or in the home. | | | | Remember …two or more of the group-oriented |
| Comprehensive major medical coverage is the | | | | health insurance plans above can be used in concert |
| favorite option of most small business owners and | | | | with a variety of tax saving strategies. |
| micro-business entrepreneurs. However, due to the | | | | Before You Go, Here's a Note About Group Cafeteria |
| enriched benefits provided by major medical plans, it | | | | Plans |
| can be a fairly costly choice. | | | | Cafeteria Plans are available to business owners and |
| Secondly, The Health Maintenance Organization | | | | their employees for the purpose of funding employee |
| (Group HMO) | | | | benefits with pre-tax dollars. The essence of a |
| The sometimes infamous: Health Maintenance | | | | cafeteria plan, as described in IRC Section 125, is that |
| Organization (aka HMO) is in reality mild mannered | | | | it allows each participating employee to choose |
| Bruce Banner (sorry, just kidding) HMO’s are | | | | among two or more benefits. In particular, the |
| managed health care platforms. They apply built-in | | | | employee may "purchase nontaxable benefits by |
| cost containment features to help reduce the risk of | | | | foregoing taxable cash compensation. Benefits under |
| loss to the underwriting insurance company, thereby | | | | a cafeteria plan are limited to cash and certain |
| reducing the cost to business owners such as, well | | | | statutory benefits, including medical, disability and |
| … you. Here’s an example: Many Blue Cross | | | | other accidental or health plan coverages, group term |
| Blue Shield plans have HMO options that provide | | | | life insurance, dependent care, group legal services, |
| benefit plans for employees who choose physicians | | | | and 401(k) plans. |
| from a approved / participating roster of health care | | | | There are many different methods of initializing |
| providers. | | | | cafeteria plans for small businesses. Every small |
| Typically HMOs are organized in much the same way. | | | | business is different, and cafeteria plans should be |
| The difference centers on the way the physician | | | | approached with that idea in mind. |
| "panel is structured. You see, prepaid group practice | | | | The choice of what type of group health insurance |
| HMOs include practitioners that are located together | | | | plan will best fit the needs of your workforce |
| in an office/complex and are hired by the plan and | | | | isn’t easy one. However, having a basic |
| paid a salary. Individual practice association HMOs | | | | knowledge of what is available can make the decision |
| include participating physicians who practice individually | | | | a little easier. The bottom line is a more important |
| and are contracted by the HMO. In both cases, the | | | | question. "Do you want a plan with quality features |
| HMO is receiving a prepaid premium from the plan | | | | and benefits?" or "Do you want to save money?" In |
| participant. | | | | most cases, you will find it difficult to have both. |
| Next Up, The Preferred Provider Organization (Group | | | | |