For some business owners, especially those who are new to the game of business ownership, the realm of health insurance coverage can be confusing. With so many terms and acronyms being thrown around, it’s easy for most anyone to be confused on some points.
This article has been written to provide a simple overview of health insurance coverage and the more common and more critical terms and concepts.
Employer Health Coverage 101
Perhaps the best place to start is to answer the commonly asked question, “Do all employers have to offer health insurance to their employees?”
The short answer is, no.
But, the longer answer is, yes, if your business employs 50 or more people they are required to offer affordable health care coverage for employees. However, as Covered California notes,
“Small business owners with fewer than 50 full-time employees are not required to offer health care coverage to their employees. However, you should know that if a small business with fewer than 50 full-time employees does offer coverage, then that coverage must comply with the requirements of the ACA.”
For the purposes of this article, it’s assumed that you are looking to provide health care for your workers.
There are basic requirements for any health care plans offered to employees of businesses with 100 or fewer workers. These include the following minimum essential benefits:
- Outpatient care you receive in a doctor’s office and not in the hospital
- Evaluation and treatment in the emergency room
- Inpatient care after you’ve been admitted to a hospital
- Care before and after your baby is born
- Treatment that includes psychotherapy and counseling for mental health and substance use
- Prescription medicine
- Physical and occupational therapy, speech-language pathology, psychiatric rehabilitation, and other services to help you recover from an injury, disability or chronic condition
- Laboratory tests
- Preventive services such as screenings, counseling, and vaccinations
- Pediatric services for children under age 19 that includes dental and vision care
The Most Common Types of Health Insurance Plans
Depending on where you look, there can be up to seven or more types of health insurance “plans”, but the three most common are PPO, HMO and EPO plans. Here is a brief explanation of each:
PPO plans encourage members to use their network of preferred doctors and hospitals. Unlike with HMOs, members are not usually required to choose a primary care physician (PCP) but can choose to see any doctor or specialist within their network. Members have an annual deductible they’ll be required to meet before coverage begins for their medical bills. In addition, there is also a copayment for certain services.
With an HMO plan, members usually have lower out-of-pocket expenses but also have fewer options for choices of PCP or hospitals than with other plans. Visits to specialists require members to obtain a referral from their PCP. HMO coverage is generally provided for a wider range of preventative services than other plans. While members typically have a copayment for services, they may not be required to pay a deductible before their coverage starts.
EPO plans are similar to HMO plans because they have a network of physicians their members are required to use except in the case of emergency. Employee members will also have a PCP who will provide referrals to in-network specialists. There is typically a lower premium than that of a PPO offered by the same insurer. With an EPO, you may have limited choices for your health care providers although likely more than through an HMO. Depending on the plan provider, you may not have to get to see a specialist.
This brings us to the topic of our article – the definition of “group health insurance.”
According to Investopedia,
“Group Insurance health plans provide coverage to a group of members, usually comprised of company employees or members of an organization. Group health members usually receive insurance at a reduced cost because the insurer’s risk is spread across a group of policyholders.”
And the Healthcare.gov site offers an even more basic definition,
“In general, a health plan offered by an employer or employee organization that provides health coverage to employees and their families.”
The major distinction of a group health plan is how it contrasts with an individual health insurance plan, which is the only option for most employees in smaller businesses that have opted not to offer group health coverage.
How are these two options different?
Individual health insurance is a policy individuals purchase for themselves and/or their families. Because of the ACA, insurance companies can no longer deny or charge more based on medical conditions. In addition, premium tax credits are available to those who qualify based on income.
Group health insurance coverage, on the other hand, is a health policy purchased by an employer and offered to eligible employees of the company and their eligible dependents. The premium cost is typically split between the employer and employee, and there is a minimum percentage rate the employer must contribute.
Ready To Learn More?
JC Lewis Insurance offers California employers health insurance plans only from leading health insurance carriers licensed to do business in California.
In addition to being expert brokers, we are licensed and certified by each insurance carrier to offer coverage to individuals, families, small group employers and to seniors with Medicare supplemental and prescription drug plans. We assist small business employers with the initial set-up, annual renewal, and on-going maintenance needed.
If you’re a small business owner looking to provide insurance coverage for your employees, you likely have many questions and concerns. Bring your questions about small group insurance and you can be confident that JC Lewis Insurance Services will help you find the right solution.