Classic Group Insurance

Your benefits and insurance package can be what attracts the best possible employees to your company. While elements of group insurance coverage are expected, such as medical and dental coverage, it's up to you to combine them in a way that is attractive to your current and prospective employees. The biggest problem employers run into with health insurance options are the costs. Employers contribute as much if not more than their employees to give them healthcare coverage. So what are the group health insurance options you can choose from? There are two types of group health plans: consumer-directed and comprehensive or a combination of the two.

Consumer-Directed Health Plans

A popular choice among small businesses that is gaining use among larger businesses is the consumer-directed type of health plan. It is called "consumer-directed" because those who contribute to the plan decide where their money will be spent. The consumer-directed health plans are typically paired with comprehensive insurance as they are more of a savings account to pay for co-pays and deductibles than actual insurance coverage. The benefits to this type of plan: low monthly premiums on the insurance side, tax-advantaged savings on the account side, and convenience.

There are some downsides though. Typically, this type of plan has much higher deductible rates that comprehensive coverage which is the trade-off for low monthly premiums. The different types of consumer-directed health plans are as follows:

• Health Savings Account (HSA) - A health savings account plan is one in which the employee contributes a specific amount of tax-free funds to a bank account that is to be used specifically for healthcare related charges. As an employer, you can choose to match funds to an HSA much like a retirement account. If the funds aren't used within the year, they roll over for use the next year. The HSA plans are basically your rainy day fund.
• Cafeteria or Flexible Spending Account - In a cafeteria plan, your employees decide what coverage they want and how much they want. The insurance premiums are paid for tax-free and money goes into the cafeteria account to be used for co-pays, deductibles, and other qualifying healthcare expenditures. The insurance premiums are even lower with a cafeteria plan than with an HSA, but as a result, the money contributed has to be used the year it was contributed or it is forfeit.

Comprehensive Group Health Plans

Comprehensive group health plans are traditional group insurance coverage and can also be made affordable to your employees. The least expensive comprehensive plans are called managed care groups. These plans create a network of doctors and healthcare professionals that you can see The most common managed care groups are as follows:

• PPO - A preferred provider organization (PPO) has comprehensive coverage on any doctor or healthcare provider, though you get a discount if they are within network. PPO plans have higher deductibles, but lower monthly premiums.
• HMO - A health maintenance organization (HMO) allows you to see any healthcare professional within your network as long as you choose a primary care physician. If you go outside your network you are on your own, but the networks usually have a very large number of healthcare professionals to choose from. This is one of the most affordable insurance options available as long as you stay in the network.
• POS - A point of service (POS) group plan is a combination of the PPO and HMO where you choose a primary care physician, but you don't need a referral for specialist care. You can choose from in or out of network healthcare professionals, though there are discounts for choosing in-network.