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What are the Different Types of Group Health Insurance?

While each of these health plans has its own set of benefits and drawbacks, it’s up to you to pick which one is best for you. You need to consider your company’s budget, employee profile, and size. Do you want more plan flexibility, lower costs, better coverage, HR relief, lower risk, or all the above? Each plan type has advantages and disadvantages. Make sure to weigh your options and pick the one that best suits your needs.

Here are eight of the most common forms of group health insurance plans.

Fully-insured plans

Fully-insured plans are one of the most traditional options. They entail the insurance company taking on the risks associated with healthcare expenditures. They also charge your firm a yearly fee for the insurance policy’s benefits. These plans are becoming less popular due to their high cost and lack of flexibility. Insurers charge small businesses more than larger companies with less risk. This is due to the number of employees, extra taxes, and administrative charges.

Self-funded plans

In a fully-insured plan, the insurance provider covers employee health costs. In a self-funded plan, the employer bears the cost. This can often result in lower rates and greater plan control. But in exchange, your company assumes the risk of paying for any catastrophic claims. Self-funded plans are often associated with giant corporations. But, small firms can also benefit from them.

The main risk it carries is that employers must pay for claims without limiting how much. The “pay-as-you-go” strategy is favorable when employees do not submit claims. But, it can be problematic when catastrophic claims occur. Fees could increase in this circumstance since the corporation absorbs policy risk. This will, in turn, blow your budget out of the water.

A self-funded plan with stop-loss insurance is an option for small enterprises. This option lowers your risk. However, it prevents you from shouldering the entire burden of catastrophic claims.

Level-funded plans

Level-funded plans are unlike the standard yearly premium plans. Instead, they get based on a monthly rate. Insurance companies will use census data to calculate the payment. This rate gets determined by claim allowances, fees, and stop-loss coverage. The insurer will alter the monthly amount based on the company’s performance.`

You pay as you go with this form of small company group health insurance plan. But it includes a cap on total possible expenses, making your costs “level.” Stop-loss insurance kicks in to cover any coverages when claims exceed the cap. Your firm will never have to pay more than your established cap. This holds even if employees file more or greater claims than expected.

Health Maintenance Organization (HMO)

An HMO is a type of plan in which members pay monthly premiums for specific health services. You’ll have access to a particular network of healthcare providers and locations if you join an HMO. But, it limits the benefits to those in that network. So, seeing any medical provider outside of the network can result in you paying the total cost. HMOs are less expensive than other types of health insurance because of this. 

Preferred Provider Organization (PPO)

PPO plans are like HMO plans, but they offer more flexibility. They do also have a network of healthcare providers and facilities. The difference is that members can visit any physician, medical provider, or location. Even if they do so, they can still avoid being responsible for the entire bill. Instead, higher co-pays and extra service costs will result from these visits.

Exclusive Provider Organization (EPO)

HMO and PPO plans get combined into EPO plans. It only allows you to use doctors, hospitals, and other care providers in your network. Your insurance does not cover any others costs incurred outside of that network. 

The only exception is emergency care, which is covered even if provided outside the network. Health insurance companies can’t charge as much for an out-of-network emergency. But, your insurance will only cover costs if they are considered an “emergency” by them.

Professional Employer Organization (PEO)

Small businesses often use PEOs without a human resources department. They handle HR-related tasks like payroll, recruiting, compensation management, benefits access, and compliance. A PEO usually serves a group of small businesses, addressing their HR needs.

A PEO can assist your company in researching insurance options for your employees. They can also help get insurance plan discounts often reserved for large corporations. They rely on their purchasing power to secure low-cost benefits and insurance coverage.

Small Business Health Options Program (SHOP)

The Affordable Care Act allowed business employers a new way to shop for the group health plan. Eligible employers must have 50 or fewer full-time equivalent employees in most states. In addition, employers must pay a portion of the premium. However, employees are not eligible for federal subsidies.

Need more help with group health insurance? 

Because there is a lot to consider, health insurance planning can be complex. Make sure to reach out to us here in Cosmo. Our brokers can help you determine what your health insurance needs are. Get a quote now and find the ideal group insurance health plan for your company.

2024