Employee health insurance varies in costs, benefits

Employee health insurance plans vary widely among companies and business owners that offer them to their staffs. Even with increased options available to policyholders to adjust their programs' premiums and benefits, costs to both employers and their employees still rise significantly.

When approaching new clients, Jennifer Young, employee benefit specialist at Nixon & Lindstrom Insurance, suggests a higher deductible amount to keep prices down. She added that many "plans come with a prescription benefit and doctor visit copay, which is what people would consider their day-to-day costs."

Different insurance options may pertain to existing employer-clients seeking to lessen their premiums. Young said "depending on how their renewal rates come in" they can either maintain identical coverage or reduce plan benefits to manage costs. An employer might also cut back its portion of premiums to the minimum of what the carrier requires, she said.

Cost and service

Lisa Baird, a partner at Database Systems of Springfield, considers both cost and agent service important. She knows, however, the price tag her company pays to provide her 12 employees with group health insurance will likely continue to rise. Even after adjusting the policy terms, "you're still going to see a minimum, probably, 10 percent increase every year," she said. She added, however, that if the change is kept close to that figure, "I'm doing pretty good."

When choosing a carrier, Chris Phillips, human resources director for Missouri Neon Advertising Company, considers cost a fundamental factor when providing insurance benefits to a larger group. She looks at "a policy based on what they can afford" in employer contributions for the firm's 60 employees.

For larger clients, "partially self-funded programs" might provide an answer to containing premium costs, according to Ron Ollis, president of Ollis and Company. Using a "third-party administrator," claims are paid from an existing pool of employee contributions, he said. To protect against catastrophic losses, the employer adds a cap of reinsurance on top of that to cover any unusually high claims they might experience, he added.

HMOs

Today, group insurance coverage is frequently done through health maintenance organizations. Gary Jacobs, president of Cox Health Systems, said "higher coverage levels" are frequently an advantage HMOs offer over more traditional group indemnity policies. "You're going to have more coverage; you'll have a copay potentially for care, but you probably won't have any co-insurance."

HMOs are essentially networks of providers who offer medical services to their members. Costs can be reduced if users stay within their HMO group of physicians. Obtaining medical help outside the network is typically more expensive. "The more you stay in the network the less costly it is," Jacobs said. Another HMO option called "point of service" allows the insured to go outside the network, but "it's usually at a lower benefit level," he said.

One way HMOs ultimately strive to reduce expenses to members is by stressing "an emphasis on preventive care," said Paul Fite, executive director of Premier Health Plans. Members are prompted to see a physician and get regular checkups. HMOs try to make this easy for them to do financially, he said.

Lower expenses

HMOs require lower expenses out of pocket than traditional insurance policies with their 80/20 coinsurance arrangements and deductible systems, according to Jim Winter, manager of groups sales and service for Premier Health Plans. "HMOs with their low copays encourage upfront utilization," he said.

Good insurance programs, while expensive, also work as a hiring and retention tool for employers. Phillips said employees are more apt to stay with a company "because they have a good health plan in place." Employees understand that to purchase health insurance as an individual is very expensive, she said.