By: Jason Gluckman
Most employees consider healthcare coverage the most important of all employee benefits. At the same time, it is an attractive benefit for many employers too. By pooling risk, business houses can buy health coverage much more cheaply than individuals. Tax benefits also ensure that healthcare is a very cost-effective way to compensate employees.
There are three popular health benefit programs for employees: traditional, HMO, and PPO. Some employers will offer just one or two of the three. Other business houses, especially ones with a diverse group of employees, will opt for all three.
Traditional health insurance offers flexibility to employees. They can visit any doctor or hospital they want and receive coverage for any treatment covered under the policy.
Its major problem, however, is cost. Premiums for traditional insurance are generally higher than for other kinds of plans. It is also costly for employees, because most plans require costly deductibles and co-insurance with each visit.
An HMO, or health maintenance organization, forms a network of doctors and hospitals, and employers pay a set fee per employee enrolled in the plan. HMOs cover visits by members only to doctors and hospitals that are part of the network.
A PPO, or preferred provider organization, is a group of physicians and hospitals that provide health care at a reduced cost to PPO members. As it imposes no restrictions like HMOs, PPOs have become very popular in recent years. Visits to doctors and hospitals outside the network are, however, not fully covered and require higher payments from the patient.
Before choosing health insurance, you must find a good broker who has a state license to sell and service contracts of multiple health plans or insurers. They are mostly self-employed or work for an independent agency. They can typically offer products from five to 15 insurers. The broker of your choice must be experienced in dealing with firms of similar size and in the same industry as your own.
