Health care basics for business

PBN Staff

09/09/2009

As small businesses struggle over health insurance, a National Association of Insurance Commissioners (NAIC) survey finds that two out of three business owners feel clueless about health insurance choices and costs.
Small-group health insurance provided by insurers is regulated by the states. However, federal law mandates that an insurer can’t deny coverage to a small business due to the health status or illness of its employees or their dependents. Here are your basic choices:
• Indemnity plans. These major medical plans typically have a deductible – the amount you pay before the insurance company begins paying benefits. After covered expenses exceed the deductible, benefits usually are paid as a percentage of actual expenses, often 80 percent. These plans offer the most flexibility in choosing where to receive care.
• Health maintenance organization (HMO). HMOs make you choose a primary care physician (PCP) from a list of network providers. Your PCP is responsible for managing all of your health care. If you need care from any network provider other than your PCP, you may need a referral. Insured employees must receive care from a network provider in order to have the claim paid through the HMO. Treatment received outside the network may be covered at a reduced level or not at all.
• Preferred-provider organization (PPO). Under these medical plans, the insurance company enters into contracts with selected hospitals and doctors to furnish services at a discount. As a member of a PPO, you may be able to seek care from a doctor or hospital that is not a preferred provider, but you will probably pay a higher deductible or co-payment.
• Point of service (POS) plans. These are a hybrid of the PPO and HMO models. They are more flexible than HMOs, but still require you to select a PCP. Like a PPO, you can go to an out-of-network provider and pay more of the cost. However, if the PCP refers you to an out-of-network doctor, the health plan will pay the cost.
• Health savings accounts (HSA) and high-deductible health plans. A health savings account is not health insurance by itself. Rather, it is a savings plan that offers an alternate way to pay for health care. HSAs let you pay for current health expenses and save for future medical and retiree health expenses on a tax-free basis. •

Daniel Kehrer can be reached at editor@business.com.

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