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Health Insurance Plan Basics

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It’s been hotly debated in Congress and by those running for President. It’s seen as a right and a necessity, not a privilege. Health insurance. There is no such thing as universal health care in the US, but one day there may be. Until then, employees rely on their employer to help subsidize the costs of health care coverage.

Health insurance is a voluntary benefit, yet many people think it’s a legal requirement for companies to offer it. Whether it’s for you or for any employees you hire on, medical insurance is an extremely important benefit to consider. With so many plans out there, here’s what you need to know when it comes to offering health coverage to you and your employees.

What Exactly is Health Insurance and How Does it Work?

Health insurance is a product that insures plan members are covered for various medical expenses. Health insurance is available in a number of different ways:
  • Government available health insurance is offered through programs such as Medicare and Medicaid.
  • Private health insurers have health plans available to individual purchasers.
  • Group plans are offered through private health insurers that cover members of the covered group at discounted health service rates.
For any of these plans, there is a monthly premium. The premium is the cost of keeping health coverage through the carrier, and in return, health care expenses are subsidized by the plan carrier. There are usually, but not always, copayments for any health service used. The copayment is the fee paid for the physician or health facility visit, and is only a fraction of the cost of a visit without health insurance.

Health insurance plans cover regular office visits to a primary care physician, specialists, laboratory tests, emergency room visits and hospital admissions. Most, but not all, plans cover prescription drug costs. Some plans are also comprehensive enough to cover basic dental and/vision services.

Health Insurance Options for Employers

As an employer, there are a number of options to choose from when picking a plan for employees.
  • Self-Insured Plan
    This plan is usually undertaken by large companies who are willing to set aside funds to pay the cost of health care claims submitted by employees, and is typically administered by a third party.

  • Managed Care Plans
    These are the HMO, POS and PPO plans most people are familiar with. These plans are offered through health insurers that contract with medical providers and facilities, and provide services at a reduced cost.

  • Consumer Driven Health Plans
    These plans are the latest alternative to managed care plans. They allow members to use a health care account such as an HSA or HRA to pay for medical services they use, while a high deductible health plan covers members for any catastrophic events.
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