Understand your options and make the right choices.
Medical insurance can be very complicated, that’s why Glover Park Wealth Managements health insurance agency and insurance industry partners will give you the medical and health insurance advice that your company needs to make an informed decision for your company and employees.
The employer contracts or hires the insurance company or carrier to assume all the financial responsibility for the participant medical claims and incurs all administrative costs.
The employer pays a monthly premium to the health insurance company who in return gives medical insurance to the company employees.
The health insurance company covers the participant medical costs after the plan deducible is met in accordance with the plan.
There is no additional risk to the employer with a fully insurance group medial insurance plan, the yearly cost of the plan covers all medical expenses and claims.
What’s the downside? The costs of the plan are a sunk cost, if employees don’t use the plan or do not have any claims, the insurance company keeps all the insurance premium payments since they bore the risk of covering all the employees in the company.
The company or employer assumes some of the financial risk for providing medical insurance benefits to employees.
Self-Funded plans will have a Third-Party Administrator (TPA) and a reinsurer or stop-loss insurance to reduce the financial risk to the employer in case there is a several large medical insurance claims.
The Third-Party Administrator (TPA) will process all medical claims on behalf of the employees for the employer’s medical health insurance plan.
The employer and TPA will setup a health insurance bank account so the TPA can pay the medical claims of the group health insurance plan that are billed by Doctors, Hospitals, Pharmacy and Specialists etc.
These plans work well for smaller employers who have particularly younger and healthier employees and who are willing to bare some of the financial risk when it comes to claims.
Level funding plans are a type of self-funding medical insurance plan where the insurance company bundles the services provided: administration, stop loss, and claims – into a single monthly premium the employer pays.
Level Funding plans are like fully insured premium plans because the employer has a monthly premium that is fixed, however, the main difference between the fully insured medical plans and the level funded medical plans is that the medical claims that the employer has are recoded by the insurance company on a yearly basis.
At the end of the year, if the claims are below a certain amount, the employer will receive a return of surplus premiums back.
If there are significant medical claims throughout the year that go above the limit, there is stop-loss insurance in the plan, the employer knows their maximum risk at the beginning of the year, so they are not responsible for the excess claims over the limit.
Employees are offered benefits in the form of financial incentives to use the insurance service providers who belong to the health insurance benefits plan:
Preferred provider organizations (PPO)
Exclusive provider organizations (EPO)
Health maintenance organizations (HMO)
Physician-hospital organizations (PHO)
These plans typically higher medical deductibles than fully-insurance, self-funded or level funded plans. High deductible health plans are usually combined with a health savings accounts (HSA) or a health reimbursement arrangement (HRA).
(HSA) and (HRA) accounts allow employees to use pre-tax dollars from their paychecks to accrue in an outside account which can earn interest or even be invested in certain mutual funds that can be used to pay for qualified medical expenses and out-of-pocket medical expenses using pre-tax dollars.
For 2022, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family.
An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $7,050 for an individual or $14,100 for a family. (This limit doesn't apply to out-of-network services.)
High Deductible Health Plan (HDHP) - Glossary | HealthCare.gov