Professional or trade association-sponsored plans allow small business owners to purchase health insurance for their employees through membership in business, trade, or professional organizations. If aggregate claims experience is poor for several years, the advantages of cost and plan design flexibility could be lost for the healthier groups in the association.
The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) is a federal law allowing employees and their dependents to continue participation in an employer-sponsored group health plan for a limited period of 18 months or 36 months if employee becomes disabled, after employment ends. Participants pay the full premiums associated with the plan, plus 2 percent to cover administrative costs. Always check plan options if cost is a factor. This could save hundreds per month on COBRA premium.
Coinsurance is the percentage of a medical bill that an insured person must pay. While coinsurance is commonly 20 percent, it can be as little as zero or as much as 50 percent (usually for out-of-network services, for example).
A co-payment, or co-pay, is a fixed-dollar amount insured persons pay each time they seek medical care, such as office visits or prescription drugs. Co-pays sometimes apply to inpatient hospital stays. Health plans usually have separate co-pay requirements for prescriptions drugs. In some ACA plans the insured has to meet the annual plan deductible before prescription co-pays start to apply. Be sure to check your plan carefully before making your final decision to purchase. We are here to help, call us if you need help in comparing plan designs.
Employee cost sharing
Employee cost sharing refers to the portion of health insurance plan covered medical expenses – above and beyond the premium contribution – that employees are expected to pay out-of-pocket. Employee cost sharing expenses include deductibles, co-payments, and coinsurance. Under ACA law the covered employee could have their out-of-pocket expenses reduced considerably, making their plan covered medical expenses less of a burden.
A flexible spending account (FSA) is funded by the employee from pre-tax income and is used to pay for medical, dental, vision, and Rx expenses not covered under an insured plan. The entire annual amount of an FSA must be made available to the employee at the beginning of the year. However, unspent balances must be forfeited to the employer at the end of the year. Plan designs only allow limited FSA covered expenses such as dental, vision, etc.; but NOT expenses associated with the medical deductible.
The Health Insurance Portability and Accountability Act (HIPPAA) of 1996 is a federal law that includes important health insurance provisions, including nondiscrimination, guaranteed renewability, guaranteed issue and limits to benefit exclusions due to pre-existing medical conditions. The OBAMACare PPACA provides coverage without consideration of pre-existing conditions, therefore, making HIPPA law irrelevant.
A health maintenance organization (HMO) is an insurance plan that requires a person to get care from providers who are part of the HMOs network. Most HMOs offer a point-of-service (POS) option for additional fees which allow insureds to have coverage out of network.
A health savings account (HSA) is an alternative to traditional insurance coverage. HSAs must be paired with a qualified high-deductible health insurance policy, the contribution to a custodial account holder that administers the HSA program is tax free to the account owner. HSA funds may be used to pay out-of-pocket costs (deductibles, coinsurance, co-pays not covered under the plan). The employer, the employee or both may fund the HSA Account. HSA accounts are owned by the employee, are fully portable and remaining balances roll over year to year. If HSA contributions are used for anything other than expenses for medical, dental, vision, chiropractic, or Long Term Care premiums, the contributions are still income tax free; however, a 20% penalty will be applied if funds are used for personal expenses other than those noted above.
A health reimbursement arrangement (HRA) is an alternative to traditional insurance coverage. HRAs are usually paired with a high-deductible health insurance policy, the contribution to which is tax-deductible to the employer. HRA funds may be used to pay out-of-pocket costs, including deductibles, coinsurance, and co-pays. The employer must fund all or some portion of the deductible, the HRA, and may decide if benefits are portable of if they roll over from year to year.
Maximum out-of-pocket expenditures
This out-of-pocket limit is the maximum amount of cost sharing an insured individual or family would have to pay in a given year under the plan design. Once a maximum out-of-pocket limit is reached, the insurer pays all covered additional medical expenses for the year, up to the plan’s limit for the calendar or plan year.
Open access plan
Patient Protection and Affordable Care Act (PPACA)
PPACA plans are designed for both individuals and employer group health coverage, currently for companies with 1-99 employees. These plans are referred to as “Marketplace on and off exchange” for individuals or “SHOP Coverage” for groups. Employer groups can purchase “off SHOP” coverage. PPACA is sometimes referred to as “ObamaCare”.
A preferred provider organization (PPO) is an insurance plan that encourages enrollees to get care from providers within the plan’s network, but allows access to providers outside the network if one is willing to pay more. Many PPOs do not require the insured person to choose a primary care doctor or get a referral to see a specialist.
Different plan types (HMOs, PPOs, POS plans) vary with respect to the degree of choice enrollees have as to which doctors or other health care providers they wish to see. HMOs have the least provider choice, as they require participants to see professionals only within the plan’s network, whereas PPOs tend to have broader networks of preferred providers and allow access to non-network providers, but at a higher cost.