Types of Health Insurance Plans
As your small business looks for the most affordable and substantial medical health insurance for your workers, shopping around puts you in position to locate a coverage plan that will satisfy your employees’ needs.
- Defined-contribution plans - Offering tiered-benefits, these plans have emerged as the newest option for small businesses. This option transfers the responsibility and risk of selecting and using a health plan from the employer to the employee. Business owners contribute a set figure towards health care for each employee, and then offer a tiered menu of choices to select from. Employees pay the difference for costlier insurance plans.
- Indemnity/Fee-For-Service (FFS). This was the standard type of insurance that was the forerunner until the 1980's. They require more management on the part of the employer, allow for more freedom of choice in physician and hospital, but premiums are costlier. Deductibles and co-payments are also more than with managed care. These plans are best for employees’ adamant on using specific providers.
- Managed Care Plans. Health Maintenance Organizations (HMO) and Preferred Provider Organizations (PPO) use a network of providers to prevent health situations from becoming more serious--and expensive. If your business has a larger amount of married individuals with families, or employees with long-term health concerns, managed care products may be the best selection for them. Managed care plans have fallen in popularity due to rising costs, and in some areas, frustrating results.
- Savings Based Plans. Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs) all work to the benefit of employer and employee. They permit tax-deferred funds to be kept in an account for use towards qualified medical charges.