Buyer’s Guide to Group Health Insurance in California
Things to consider when setting up a group health insurance plan for your employees.
Understand your employee’s expectations.
Not all employees expect or want the same thing. Some may want comprehensive coverage and are willing a pay a large portion of the cost for that coverage. Others may feel invincible and not care at all about health insurance but really want a good dental plan. Talk to your employees. Understand what they want. Ask them what type of coverage they had at their last job. Ask them what type of coverage they have today. Ask them what is most important to them: low monthly cost (premium); low or no deductible and co-insurance costs when they receive medical treatment; specific doctors and hospitals that they must have, etc.
Tailor your group employee benefits to the needs and desires of your employees.
You can offer your employees a variety of different medical insurance plans. As long as you treat them all equitably, they can select any of the plans that you offer. For example, some people love Kaiser others wouldn’t be caught dead there. Your company can offer some employees Kaiser while at the same time offering non-Kaiser plans such as Anthem Blue Cross, Aetna or Health Net. You can also offer HMO or PPO plans; high deductible and low or no deductible plans; and plans with full provider networks and narrow networks – all at the same time. Some insurance companies offer more flexibility than others. You may want to keep things simple and offer everyone a single plan. No problem. Consult with the staff at BenefitsCafe.com to help you determine which insurance company best fits your needs.
Determine whether a small or narrow network of providers will work for your employees.
Small or narrow provider networks cost less than full network plans. It is a good way to lower the cost of coverage. Often the high cost of full network plans is based on a few high-cost hospitals and associated doctors. For example, Cedars-Sinai Medical Center is a great hospital but also one of the most expensive in the country. If your employees don’t live on the west side of Los Angeles, where Cedars is located, you may be okay using a narrow network that excludes Cedars. You and your agent need to check the doctor and hospital preferences of your employees and match those to the various medical plans from all of the insurance companies. This will save you a lot of money because you won’t be paying for a full network of providers while your employees and dependents only use low cost doctors and hospitals.
Determine the amount that you can comfortably pay for employee health insurance.
Once you offer your employees coverage you’ll want to keep the plan in place. So, select a plan or plans that you can comfortably afford. You can share the cost with your employees. Your industry and employee expectations will likely determine the amount that you ask your employees to share. If your employees are highly trained and can easily get another job that offers benefits, then you’ll likely need to match that. Often, employers “sponsor” a specific plan, such as the Kaiser $1500 copay plan, and pay 100 percent of the premium for that plan for the employee. Employees would pay for dependent coverage and they would also pay any additional cost for “buying up” to a plan with better benefits.
Allow your employees to select a plan from a few different medical insurance plan options.
People like choice – but not too many choices. You can offer your employees a few different plan options, for example two HMO plans – one low cost plan with a deductible and one higher cost plan with no deductible; and two PPO plans – one moderate deductible (apx. $1000) and one high deductible ($3,000 plus) plan, possibly an HSA compatible plan. If you pay a specific amount or sponsor a specific plan, employees can select the plan that best fits their needs. This is a popular strategy.
Determine which insurance company or companies (with CalChoice or SHOP) you want to offer.
Each insurance company has unique aspects to it. For example, Kaiser is a closed system where members see only Kaiser doctors and receive all treatment there. Many people like to comprehensive, coordinated approach to health care delivery. Other insurance companies offer a wide range of choices for medical providers. For example, Anthem, Aetna, Blue Shield and United HealthCare offer PPO plans with a very large number of doctors and hospitals. CalChoice and SHOP allow you to offer a few different insurance companies at the same time (e.g., Aetna, Kaiser and Anthem.) Once you know what your employees want, you can narrow down the insurance company. Of course, the cost (premium) and the benefits these insurance companies offer are very important considerations.
Determine the level of benefits (e.g., Gold, Silver, Bronze, etc.) that you want to offer.
The Affordable Care Act (ACA) requires insurance companies to separate the plans they offer into different benefit levels, (e.g., Platinum, Gold, etc.). This requirement applies to employers with fewer than 100 employees. Platinum plans have richer benefits and likely cost more if they offer full networks with the rich benefits. You may want to select a certain level of benefit and offer your employees plans within a specific “metal tier.” Cal Choice and Covered California SHOP exchanges restrict groups to offering only a single metal tier or two adjacent tiers (e.g., Silver and Bronze, but not Gold and Bronze.)