The idea behind commercial health insurance is to provide health care not only for you but also for your employees. That’s pretty simple; Well, it’s not as simple as it may seem at first.
Because health care in the United States is a difficult tangle of competing insurance companies, plans, and laws. The willingness of companies to provide health care coverage to their employees is often dictated by geography. Some state laws may affect any health policy that a company wishes to introduce. A recent survey commissioned by the US Department of Health and Human Services found that about 67% of employees are covered in one way or another by an employer-sponsored health care plan. One way to put this in perspective is that if a highly skilled worker receives three job offers, it is more than likely that at least two of them include health insurance and the third does not. You don’t have to be a neurosurgeon to know who they would choose for interviews.
Health insurance is available in four basic types;
1. Medicare and Medicaid: Medicare is a government-backed insurance plan for anyone age 65 or older or in the last stages of kidney failure. With an increasingly aging workforce, many businesses find themselves with employees age 65 and older who are looking for free insurance coverage. Medicaid is also a government insurance that is aimed at those who are very poor and some categories of disabled. Some states are now getting very strict with employers completely relying on this type of insurance for their low-wage workers.
2. Traditional or indemnity insurance: This more traditional type of health insurance is usually offered by the insurer for a premium, this allows the insured person or persons to choose the health provider of their choice and for the costs incurred by them to be reimbursed by the insurer You only have to go back about 20 years and you would see that this was the most common form of health insurance. These days, unless you have a very large business, this type of coverage is not a viable option, so it is virtually non-existent.
3. Health Maintenance Organizations (or HMOs): An HMO is an organization of physicians, care providers, and hospitals that have entered into an agreement with insurers to provide medical care at a lower than negotiated rate. The HMO type of coverage uses a primary care physician to arrange care for people insured under that plan. However, people insured under this plan will be limited in their choice of hospital, doctor or any other services to those in the HMO, but that person may be referred to a non-plan specialist as long as the PCP approves. . Under this scheme, premiums are reduced due to scale and care management.
4. Preferred Provider Organizations (or PPOs): PPOs and HMOs are very similar in some ways, but they are even more restrictive. With an HMO, there may be two or three different hospitals you can choose from, as long as they are in the plan. With a PPO, the insurance company will have designated hospitals and doctors that are within a dedicated network. The insured person(s) will have a PCP but any care that must be covered must be done within this framework. If any care must be performed outside of this network, the insured must bear most or even all of the costs involved. Premiums under this scheme are greatly reduced, but so are your healthcare options. If you’re lucky enough to live in an area with very good health care facilities, a local PPO plan will give you great savings over HMO and traditional policies.
Most plans will have variations, but for the most part the four mentioned above will form any combination.