Business.com - Basics of Health Insurance as an Employee Benefit

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Review basic employee health insurance options

BIO:

Randy Philip is a principal consultant at the Washington Insurance Consulting Group.

TRANSCRIPT:

I'm Randy Philip, Principal Consultant with the Washington Insurance Consulting Group. I and my two partners have over 70 years of experience working with small to medium sized companies with their health insurance and employee benefit needs.

Today we're going to be talking about the basics of health insurance. Let's talk about the various types of health insurance plans that are out there. Originally, there were indemnity plans. Indemnity plans were plans that just said, "Look, you go to any doctor that you want to go to, you submit the bill to the insurance carrier, and they pay that bill."

Then indemnity plans evolved into PPO plans, and that's where an insurance company will contract with a set list of doctors and say, "Look, if you go to these doctors, we're going to reimburse your benefits higher, or we're going to give you a higher benefit than if you went to doctors that were outside of our network."

The next evolution in the health care schedule was the HMO. That's the health maintenance organization. That's where you are only able to go to doctors or providers that work exclusively inside the health insurance network. Health insurance carriers did that because they wanted to control costs, but what they did with that was by controlling costs, they were also able to seriously increase your level of benefits.

Next on the evolution was the point of service. It's kind of a hybrid between a PPO and an HMO—PPO being a Preferred Provider Organization and an HMO being that health maintenance organization. So it kind of gives you the best of both worlds. It incentivizes you to try and stay in network, where you're going to receive your best network benefits, your best level of benefits, but on those occasions where you had to go outside the network, where you're just determined to go outside of the network, it would pay you some benefits or reimburse you for going outside that network.

The last thing on that evolutionary list—which I do not support—are your mini-meds or your limited benefit programs. Those are programs that are not health insurance; they are not health insurance programs. They are programs that are designed to reimburse the employee for some levels of service.

It would be unfortunate for you to have a good employee that the only thing that is keeping them from working with you or staying with your company is the fact that you don't have health insurance

So you really want to be careful when you're looking at health insurance that you understand what level of benefit that you need and that you secure the correct level.

This has been Randy Philip, Principal Consultant with the Washington Insurance Consulting Group located in Alexandria, Virginia for business.com. Please remember the following points:

• PPOs pay for in- and out-of-network care
• HMOs pay for service in network only
• POS plans combine PPO and HMO features
• Limited benefit plans cover only some medical care

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