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The Costs of Health Insurance Group Coverage

Health insurance costs can vary significantly as per the type, size and location of a business. The features of the insurance plan selected also impact the costs of health insurance. For a small business, in some states, the health status of its employees and their families can affect the group’s premium when the business buys or renews coverage.

The most important price consideration for your business is usually the monthly premium. Generally, this amount is shared by the employer and the employees. The insurance plan carrier determines the premiums on annual basis and it may modify these rates according to changes in healthcare and medical costs index, the number of employees and their dependents insured, and the changes in benefits offered or cost sharing between employees. The employees have the option of paying their premiums through pre-tax payroll deductions that help in reducing their premium and make health coverage more affordable for them.

There are certain states in the U.S. where insurance companies consider the health status to establish a company’s premium through the process of €medical underwriting’. The premium costs may therefore increase and at times quite significantly, if one or more employees or their dependants have a pre-existing medical condition. It should also be mentioned here that under non-discrimination rules, if an employee/employees meets/meet the basic eligibility requirements, they cannot be excluded from health coverage policy on grounds of their pre-existing medical conditions.

Employee cost sharing

Employee cost sharing refers to the share of health insurance costs – over and above the premium contribution – that employees are supposed to pay out-of-pocket for a health service, medicine or treatment. The expenses under employee cost sharing include:

Deductible – This is the amount that the insured person needs to pay for covered health services before the expenses are paid by the health plan. Once the yearly deductible is met, the plan starts to pay for the enrollee’s medical expenses. Annual deductibles generally range between $100 and $500 per person but this amount has been increasing with rise in inflation. Certain plans keep separate deductibles for pharmacy benefits.

Co-payment – Co-payment is a fixed dollar amount that insured person pays each time he/she seeks medical services. For instance, it could be $12 when they need to see a primary healthcare doctor and $35 when they need to be admitted for emergency care. Health plans typically have separate co-pay conditions for different prescription drugs and it is higher for specialty medicines.

Co-insurance – It refers to the percentage of the total medical bill that the insured person needs to pay. Commonly the arrangement is that enrollers have to pay 20% and the health insurance plan pays 80% of the total cost. Of late, some plans have been requiring the insured to pay greater co-insurance amounts – between 30% and 50% – especially for the services offered outside the network of providers.

Understanding Provider Choice

Provider choice implies the degree to which the insured can choose among doctors and specialists based in their geographic areas. The conventional Health Maintenance Organizations (HMOs) have limited provider networks to control costs and they may provide relatively small provider choice. Furthermore, with HMOs you typically need a referral to see a specialist. A point-of-service (POS) plan is an HMO that permits you to go out of the HMO provider network and there is no need to incur full (100%) costs of doing so. Therefore with POS plans you get more provider choice than the traditional HMOs.

Preferred Provider Organizations (PPOs) give you the widest access to providers. This is because their own network is very large and above that they give access to out-of-network provider, although that’s at a higher price than in their own network.