Providing group health insurance is a central part of employer responsibilities to their team. Health insurance is always more comprehensive and affordable when bought in bulk, which is why employers have become the primary providers of health insurance to today’s workforce. Your team relies on you to make smart decisions in the group health insurance that you make available.
Choosing the right group health insurance is a balancing act. You must balance the coverage needed by your team, the cost to the company, and the deductibles paid out-of-pocket for your staff to get the medical care they need. Naturally, you want to choose a health plan that provides the greatest value to both your employees and to the company itself.
Let’s take a deeper look at what to consider when selecting your team’s group health insurance.
Things to Consider When Selecting Group Health Insurance
1. The Age and Demographic Range of Your Workforce
First, take into account the general age-range and demographic of your workforce. You may already have some data on how often they visit the doctor and fill prescriptions. Teams with an older demographic will have higher regular use of health care services and care, while younger-skewed teams are likely to be healthier with far fewer visits to the doctor or uses of health plan services.
Furthermore, you will want a plan that offers full coverage for preventative care and reasonable funds for appointments, specialists, surgery, and prescriptions as these things are commonly – if not frequently – needed by every team and their families.
2. High Premiums or High Deductibles?
In employer-provided group health insurance, there is a careful balance between premiums and deductibles. High premiums put financial pressure on the employer, lowering your budget for other employee perks. High deductibles put more of the expense on the employees, which may or may not be smart depending on your team demographics and average salaries.
High-premium plans are more likely to be useful for a workforce that visits the doctor often, as your money’s worth will be fully utilized. If your team rarely visits the doctor, high deductible plans with good preventative coverage are the better choice, lowering monthly costs with a focus on the few services needed each year.
3. Qualified HDHPs and Your Workforce
An HDHP is a High-Deductible Health Plan. This lowers the cost of employer-paid premiums and asks employees to pay a higher cost per non-qualified service. Many businesses start with high-premium plans to best take care of employees, only to discover that their teams visit the doctor only a couple of times a year. As teams become more comfortable with the workings of group health insurance, HDHPs may become more appealing. Most importantly, HDHPs still provide 100% coverage for preventative care but cost more to your team for more specific treatments.
The ideal pairing with an HDHP is a Health Savings Account (HSA) plan to help employees cover the deductibles with some convenient pre-tax benefits. Be sure to choose an HDHP that is qualified for HSA pairing. This can also be phrased as an HSA-Qualified HDHP insurance.
4. Providing an HSA to Cover Employee Deductibles
HSAs are a popular health plan addition, pairing perfectly with a cost-effective choice of HDHP insurance. HSA stands for Health Savings Account. These are individual accounts managed by employers but belonging to employees – much like 401K retirement account. Employees can use the funds in their HSA to cover qualified health plan deductible costs – helping to off-set the increased deductible of an HDHP and reducing the financial pressure of employees who make use of their health benefits.
How an HSA Works
HSA accounts are built with pre-tax payroll deductions. Employers or their team members decide how much is taken out each month. This increases the balance of each account, and the funds are dedicated specifically to pay qualified health plan deductibles. What is qualified is a comprehensive list that excludes only a few optional, over-the-counter, and cosmetic services.
HSAs belong to the employee, so they can also take their HSA account when they move on to later employers, providing a long-term benefit that does not expire unlike an employer-sponsored FSA (flexible spending account).
Tax Benefits of an HSA
Health savings accounts are designed to reduce taxes paid on health care services. Contributions to each account made through payroll deductions are pre-tax, allowing employees to both increase their ability to contribute and reduce their taxable income for the same benefit.
Likewise, paying out for health services from an HSA is also tax-free. Therefore income used for HSA benefits is completely exempt from reduction via taxation. This allows employees to make the most of their income for health purposes.
Lastly, investment gains for each HSA account are also a tax-free increase to the HSA balance.
Qualified Plans and Services
The primary thing to understand about providing an HSA is what qualifies to make them useful. First, you need an HSA-Qualified HDHP. Second, HSA funds can only be used to cover the costs of qualified health deductibles.
5. The Right Amount of Family Coverage
Next, think carefully about how much family coverage your team members need. Right now, the minimum required amount of pediatric dental and vision coverage is quite low. You may want to choose a plan with more family coverage than the default package for each plan option. If your team members are parents and family persons, then be aware of the family coverage they will need to be happy and well taken care of.
6. Compare Network Inclusion of Doctors and Hospitals
Health plans across the board are cutting costs by reducing the number of doctor practices, local clinics, and hospitals that are included in each plan. Your teams may discover that the new health plan does not include their favorite health providers, which can cause conflicts. Before choosing a health plan, compare and contrast the local providers included in their health network. Consider, also, the inclusion of common specialists who are often needed for conditions that occur frequently within families over time.
7. Identify a Separate Deductible for Prescriptions
Prescriptions are often listed with a separate set of deductibles. Pay attention to the deductibles for prescription drugs between available plans to ensure that you are not choosing a plan that will cost more for your team to fill their prescriptions compared to the general deductible for health services. Your HSA also includes specific rules in which deductibles for medications are only covered with a written prescription.
8. Consider Difference in Drug Tier Costs
Many health plans define drugs by tiers of cost and availability. Higher-cost drugs that are inherently more expensive or more difficult to source are often listed at higher tiers. Name-brand drugs may be high-tier while their generic and lower-cost counterparts are more available. However, these tiers are not the same from plan to plan. It’s worth considering the difference in tiers to determine the potential difference in costs for your employees filling prescriptions.
Pioneer: Professional Insights to Find Your Ideal Group Health Plan
Choosing a group health plan is an important yet weighty responsibility – one that many employers do not feel confident to make on their own. It takes a detailed understanding of the health system and how to compare the potential impact of each plan to make the best decision. Your team deserves the lowest cost for the best care, and everyone benefits when your company can redirect premium dollars to additional employee perks.
Let our Pioneer team experts help you make the right decision. We’ll help you break down the options to find the ideal choice for your team’s lifestyle, income, and health needs. We can also help you save up to 30% on health plan costs. Contact us today to find out more!