 Choosing health insurance for a small bizQ: We want to offer health insurance to employees of our new business. We think we want to offer a standard HMO policy, but there are other options. What would you suggest? How much can we afford? Thanks. — Jennifer A: You’re smart to make health insurance a priority. People work for many reasons and, increasingly, obtaining quality benefits is high on the list. If you want to attract and retain great employees, then offering quality health care is vital. When choosing a health-care plan for your small business, the decision will likely come down to how much bang you can get for your buck, so the initial thing to consider is the extent of the coverage you want and can afford. A typical plan should cover most of the following:
The fees associated with any health-care plan are threefold: Monthly premiums, deductibles and co-pays. Generally, the more you and your employees agree to pay, the more coverage you can get. A higher deductible (the amount your employees pay out of pocket before the benefits kick in) lowers your monthly premium. It is probable that, given the ever-increasing costs associated with health care today, you will be unable to offer your employees everything they want. So the key thing is to sit down with them and discover what they need most, as opposed to what they want, and offer at least that. Here are your choices: Traditional fee-for-service plan - Here, you pick an insurer and plan that you like, the deductible amount your employees would have to meet and the amount your employees would be required to pay (say 20%, called “co-insurance.”) The lower the deductible and co-insurance amounts, the more the plan premiums will cost. The nice thing about fee-for-service plans is that they are simple and flexible. If your staff gets hurt or sick, they go to the doctor, and the insurance company pays for the majority of the cost after the deductible has been met. Aside from simplicity, fee-for-service plans are also nice; they allow members to choose their own doctors and they usually don’t need to get a referral to see a specialist. Disadvantages include:
Health Maintenance Organizations (HMOs) - An HMO plan requires that members get their medical care from doctors within a specific network. HMOs have become popular because they offer quality health care at more affordable rates than traditional insurance plans. With an HMO you choose a “primary care” physician within the HMO network who would be the person employees see first when they have medical issues. He or she is the doctor who refers patients to specialists. One real advantage of HMOs over fee-for-service plans is the wide variety of care available, including counseling, maternity care, specialists and wellness programs. Another benefit is that fees are usually lower. The downsides are:
Preferred Provider Organizations (PPOs) - Like HMOs, PPOs are another type of managed-care system. Unlike HMOs, PPOs do not require participants to get their care from providers within the network. A PPO is akin to a loose amalgamation of providers. While the PPO maintains an HMO-type network, it also offers the option to choose outside doctors when necessary. The catch is that it costs significantly more to go outside the network. Another major difference between an HMO and a PPO is that with a PPO you need not choose a primary care physician. The downside to all of this flexibility is that it costs more. Point of Service Plans (POSs) - Another managed-care system, a POS, (as with a PPO) patients can go outside the system, but they have to be willing to pay. Other benefits include no deductibles, low co-pays and no referral required to see outside specialists. Exclusive Provider Organizations (EPOs) - An EPO is very much like an HMO. Patients pick a primary-care physician, who provides most of their health care and who regulates their access to the system. The difference is that EPOs offer even fewer providers, so the costs are lower, too. The important thing then is to be sure that the EPO provides enough different types of care so that your employees can get the medical attention they may need. How did Steve answer other questions? Read his previous columns Steve Strauss is one of the country's leading small business experts, a columnist for USATODAY.com, and the author of the "Small Business Bible." If you would like to have Steve speak to your group, or to sign up for his free e-newsletter Small Business Success Secrets!, visit his Web site. Have a question for Steve? Send him an e-mail.
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