When looking for a new position, job seekers usually scan the position title, qualifications, job requirements, and then check the listing for health insurance.
With the ever-rising cost of healthcare, savvy job seekers need health insurance; it’s just too risky to NOT have it. The good news for small businesses is that there are many ways to offer this benefit.
Let’s discuss three of the most common options: HMOs, PPOs, and HDHPs.
What is an HMO?
A health maintenance organization, or HMO, is a type of health insurance plan that typically requires employees to choose a primary care physician or PCP from a list of participating providers. The PCP becomes their first point of contact when seeking care. In many HMO plans, a referral from a PCP is required to see a specialist, have specialized testing, and receive other medical care that may be needed.
The key benefits of HMO plans include:
- Lower Premiums: As HMO plans have a very specific network of doctors, lower premiums, and less out of pocket expenses usually follow.
- Prevention Focused: HMO plans typically incentivize focus on preventative care like regular screenings and check-ups.
- Simplified: HMO plans are not the most flexible choice out there, but, in some ways, this makes it easier to work with. For example, most care is coordinated for the employees, leading to less employer paperwork as there are not as many moving parts to track.
HMO plans are a good choice for small businesses looking to help employees keep costs down.
What is a PPO?
Preferred provider organizations or PPOs are health insurance plans that work with specificallyq contracted medical providers. These providers include everything from doctors to specialists, hospitals to urgent care clinics, pharmacies to labs, and other types of medical facilities. Most PPO plans give you the option to go out of network to choose your doctors and other medical facilities, something other health plans, like HMOs, don’t offer.
The key benefits of PPO plans include:
- Flexibility: your employees can usually choose their doctors and medical facilities, giving them the power to decide how, and where they receive healthcare.
PPO plans are best for small businesses whose employees want or need the option to choose their healthcare providers.
What are HDHPs?
High-deductible health plans, or HDHPs, are health insurance plans that have low monthly premiums, but a high annual deductible. Once the individual or family’s annual deductible is met, the insurance company will help pay for a percentage of qualified, in-network medical expenses for the remainder of the health plan’s calendar year.
For a small business, you can pair a qualified HDHP with a tax-advantaged Health Savings Account (HSA). An HSA is an excellent way to help employees pay for qualified medical expenses and offset the high deductible cost associated with an HDHP.
The key benefits of HDHPs are:
- Low premiums: Small businesses may find HDHPs more affordable due to low monthly costs resulting in lower cost-sharing contributions to employee healthcare premiums.
- It can be ideal for younger and healthy employees: Employees who don’t visit the doctor often or are unlikely to need as much coverage may find an HDHP ideal. They are a great way to cover your employees and keep their monthly costs to a minimum.
- Ability to pair with an HSA: As long as you enroll in a qualified HDHP, you can offer your employees an HSA option. An HSA provides tax advantages, and your employees own their accounts, making them an attractive benefit.
HDHPs are a good choice for businesses looking to keep monthly costs down and have the option to offer an HSA to assist employees with their healthcare costs further.
These are just a few options small businesses have when it comes to offering your employees health insurance. Take time to research the options and find the plan that works best for you and your team.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.