The drastic increase in health care costs in recent decades has forced business owners to seek ways to cut costs and keep premiums low without compromising on employee benefits. Many employers raise deductibles or co-insurance levels. Some choose not to cover procedures that are not mandated by the state, while still others require employees to pay a portion of their insurance premium. Offering a variety of plan options to employees is one way to help keep costs in line.

Managed Care Plans

Managed Care plans offer one of the most effective means of controlling costs. An extensive network of doctors and hospitals provide health care at predetermined fees in exchange for patient flow. Managed care plans like the Preferred Provider Organization (PPO) save 15% over traditional plans, while ensuring quality. The network handles all administrative items i.e. claim forms and Precertification phone calls. The only concern could be the limitation over the employee’s choice of doctors and hospitals.

 

Health Maintenance Organization (HMO) 

HMO’s present the maximum opportunity to save costs but can be restrictive in choice. The advantages include low co-payments, less paperwork and coverage for some preventive-care and health-improvement programs. The employee must choose a primary care physician (PCP). Only network doctors must be consulted to ensure receiving payment. A PCP must provide a referral for a specialist (within the HMO network).  

 

Preferred Provider Organization (PPO)

PPO’s involve an arrangement between a group of doctors or other providers and an employers plan (usually arranged in conjunction through the insurance carrier), resulting in price discounts on services in exchange for a higher volume of patients. The employees have the choice of whether or not to use network doctors and hospitals. Using the network provides a much lower out of pocket. Consulting with a doctor or other provider outside the network involves higher out of pocket costs. 

 

Exclusive Provider Organizations (EPO)

An EPO resembles an HMO. EPOs decrease the financial stakes when obtaining treatment provided you are staying in the network. Using a provider outside the network makes the employee responsible for the entire cost.  

 

Dual Option Plan

The employee enjoys the option of selecting between two different types of health plans (usually from the same carrier – a PPO and an HMO, A POS and an HMO or an indemnity plan and an HMO). The rates are different between each plan. The employer pays just one bill and has a single source of administrative costs.

 

Point of Service Plan

A combination of an HMO and PPO is the point-of-service plan encompassing the HMO’s comprehensive care, and the PPO’s freedom of choice. All care must be from a primary care physician to get maximum benefits.

 

Under the traditional indemnity plan, standard deductibles and co-payments are offered with freedom to choose doctors or hospitals. To control costs, insurance carriers have enhanced indemnity plans with managed care elements, resulting in flexibility in exchange for higher out-of-pocket expenses, more paperwork, and higher premiums.  

 

Sharing costs with employees through shared premium or higher deductibles and coinsurance levels is another way to control health care costs and premiums.

 

Funding Alternatives - Managed Indemnity

In a typical self-insurance plan, the employer pays claims up to a certain limit with the insurance company sharing the payment of additional claims. There is no premium tax on the self-insured portion of the plan, and the plan itself is not subject to costly state-mandated benefits.

 

Effective Communication with Employees

Communicating with employees has proved to be a crucial, but less tangible cost control effort. For instance, an employee must understand how a network functions in a managed care plan, and how using a network doctor can benefit both employees and employers. Most insurance carriers help with brochures, newsletters and other visual media to support these efforts.