Get Expert Advice to Avoid the Traps

The best thing you can do if you are in the market for the right coverage for you and your employees, is to consult an insurance broker who specializes in group insurance. An experienced broker will interview you to determine your needs and then present you with plan options that best fit those needs at the lowest possible cost.

For your own peace of mind, get an idea of the types of coverage you may want to offer your employees. Conducting an employee survey to find out what benefit plans and issues interest them the most can be very helpful.

For instance, ask them to rank the following benefits in order of importance.

Medical Care – HMO
Medical Care – HSA
Medical Care – PPO
Dental Care
Chiropractic Care
Life Insurance
Long Term Disability Income Replacement
Retirement/401K
Section 125 Cafeteria Plans
Vision Care

Try to get an idea of how frequently they and/or their dependents would use each of these benefits.

Some employees may be interested in additional coverage. So, ask them if you were to offer them voluntary/employee paid benefits at low cost and group rates through payroll deduction, which of the following benefits would they be interested in?

Accident Coverage
Life Insurance
Critical Illness
Long Term Care
Cancer Coverage
Long Term Disability
Hospital Income
Group Legal Plan

After reviewing the answers to these questions, you should have a better concept of the types of benefits you want to offer. Now, it is time to consult the expert.

Not all brokers have the same experience or style. Ask other business owners for referrals if they have found a good broker. You want a broker that asks you the right questions to get an accurate group health profile so they can design the right [plans for your group.

Information they ask should include:

Has anyone been advised to have surgery in the last six months, or anticipate hospitalization for any other reason?

Has anyone been treated for a serious illness, been hospitalized or had surgery in the past 5 years (e.g. AIDS, Cancer, Cardiovascular Disease, Juvenile Diabetes, Mental Illness, Renal Disease, Substance Abuse)?

Are any employees or their dependents pregnant?

Has anyone had a medical expense of $5,000 or more in the past 12 months?

Has any employee missed 10 or more consecutive days of work in the past 12 months due to illness or injury?

Are there any employees who are not actively at work performing his or her duties full time due to illness or injury?

Are all covered employees listed on the employer's DE6 (quarterly state tax report)?

Are there any current or former employees or dependents currently on medical continuation (COBRA, State Continuation, and Extended Benefits)?

Is anyone apt to have a continuing expense from an existing mental or physical disorder?

All of the information the broker gathers will be used to design a personalized plan that best suits the needs of you and your employees. Having all of this information influences the design of your perfect plan.

Consulting an expert will save you time and money and will help you to offer the best group insurance benefits to your employees.

Health Savings Accounts

Health Savings Accounts (HSA) are becoming more popular as the cost of health insurance continues to increase.

An HSA is a special bank account that is set up in conjuctions with the enrollment in a high deductible health plan (HDHP).

You, your employee or an eligible family member can make tax free contributions to the HSA. The HSA will earn interest that is not taxed and any withdrawals to pay for qualified medical expenses are also not taxed. Any funds remaining in the account at the end of each year is carried over to the next year.

The contribution to an HSA each year is limited to the amount of the HDHP deductible or $2,650 for individuals and $5,250 for families, whichever is less. You or your employee may not contribute to an HSA once you or your eomployee becomes eligible for and enrolled in Medicare. Your or your eomployee can make withdrawals to pay for qualified medical expenses by check or debit card just as you would with any other bank account.

Your employee owns the HSA so that your employee can keep the account even if he changes health insurance plans or jobs. However, if the owner of the account is not enrolled in an HDHP, he can no longer make contributions to the account.

An HDHP is a health insurance plan that has a high deductible of, at least, $1,000 for individuals and $2,000 for families, adjusted each year for the cost of living. Despite the high deductibles most HDHPs will cover preventative care in full. To be enrolled in an HDHP, the enrollee cannot be covered by any other health insurance coverage, including under a spouse's plan, that is not a HDHP.

An HSA provides a method for you or your employees to reduce health insurance costs by enrolling in a less expensive HDHP as long as you or your employees are willing to finance, through the HsA, the medical expenses that are incurred, up to the amount of the deductible.

You should consult with a tax advisor to determine eligibility requirements and tax advantages before you decide to participate in an HSA.

If you and your employees decide that an HSA is a good alternative to the more traditional health insurance plans, The United State Federation of Small Businesses (USFSB) can offer you, from selected carriers, this less costly option.

Another way USFSB can help you reduce your costs for medical services is through the use of a Medical Discount Card. It is important to note that this is not insurance. The Medical Discount Card can be used, at participating health care providers, to obtain reduced cost for the services that are rendered as long as you are prepared to pay for the services at that time.

The Annual Deductible of a Health Insurance Policy

Now, some health care procedures, like office visits, preventative care and generic drug prescriptions, may have a set co-pay. For anything that has a set co-pay, the amount of that co-pay does not count towards your deductible. Now you may not be happy about that, but you must understand that these co-pay amounts are lower than you would pay without the coverage.

How Does the Annual Deductible Work?

Say your policy has an annual deductible of $1,000. By its definition as noted above, you would be responsible for paying for $1,000 worth of health care expenses (excluding co-pays as mentioned above) for the calendar year. Once you have paid for health care services that total $1,000, the insurance company steps up and contributes to any additional costs as outlined by your policy.

In a typical PPO plan, this usually means that you will have to pay for a percentage of the cost. The insurance company negotiates how much the service will cost with the service provider. You pay your percentage and the insurance company pays the balance.

Annual deductibles are either based on the individual or on the family if more than one person is covered by the policy. The individual deductible applies to each covered person separately. In the case of an individual deductible, each member must meet the annual deductible before the insurance company contributes to the costs of that individual.

Family deductibles apply to all covered members of a family. Depending on the guidelines, meeting the deductible can be shared by two or more family members.

This leads us to one of the most common family deductible formats, the two member max.

The Two Member Max Clause:

If your policy covers more than one person, you may see a footnote on the annual deductible that says "2 member max". Effectively then, two of the people covered on the policy must each meet the deductible before the insurance company will help pay for the health care costs of all covered members.

What is just one person meets the deductible? If one person meets the deductible then the insurance company will contribute to that person's health care costs and not any of the other covered members. And, this person's future expenses do not count towards any other member's deductible. A second member must also meet the deductible before the insurance company will contribute to their health care expenses.

If there are more than two people covered under the policy, once two of the members have reached the deductible, the insurance company will contribute to all members' health care costs.

Don't let your annual deductible take you by surprise. Know what it is and how it is structured.