How to Offer Competitive Health Plans for Employees

Why do employers provide health insurance coverage to their employees?

Employers provide health insurance benefits for employees for a variety of reasons that serve both the business and its workers. As you build your company and your team, quality health insurance is an offering that helps you compete for the type of talent that can take your business to the next level.

Providing healthcare shows you're committed to your team's well-being, which can help boost morale and productivity. And with access to preventive care and treatment for illness and injuries, employees feel more secure, take fewer sick days, and have better overall job performance. Health insurance also reduces financial stress for your employees by lowering out-of-pocket expenses for medical care.

Beyond these advantages, many employers also have legal obligations to offer health insurance. Under the Affordable Care Act (ACA), businesses with 50 or more full-time employees must provide coverage to stay compliant with federal law and avoid costly penalties. Even for smaller companies that aren’t legally required to offer it, providing health insurance can help build loyalty, reduce turnover, and create a happier workforce (and a healthier bottom line).

What are competitive health plans for employees?

Competitive health plans for employees usually feature a range of options and often include employer contributions to premiums, reducing out-of-pocket costs for employees. Providing employees with options that include broad provider networks, comprehensive coverage including preventive care, and additional features like telemedicine and free health assessment tools can help them manage their healthcare in a more convenient and proactive manner.

Choosing the right plan(s) will depend on your company’s specific needs and your budget, but here are a few standard insurance plans to consider:

• Preferred Provider Organization (PPO): PPOs offer the most flexibility in choosing healthcare providers and do not require referrals for specialists. They cover both in-network and out-of-network care, though in-network providers generally cost less.

• Health Maintenance Organization (HMO): HMOs require members to choose a primary care physician and get referrals to see specialists. While they often have lower premiums and out-of-pocket costs, they limit coverage to network providers.

• Point of Service Plan (POS): POS plans blend the features of HMO and PPO plans. They require a primary care physician and referrals for specialists but allow out-of-network care at a higher cost. They offer a balance of provider flexibility and coverage options.

• Exclusive Provider Organization (EPO): EPOs cover only services from in-network providers and do not require referrals for specialists. Out-of-network care is not covered except in emergencies.

• Health Savings Account (HSA) Qualified Plan: HSA-qualified plans are typically high-deductible health plans that enable individuals to save pre-tax money for medical expenses. Contributions to the HSA are tax-deductible, and funds roll over yearly.

• Indemnity Plans: Indemnity plans, or fee-for-service plans, offer maximum flexibility by allowing members to choose any healthcare provider without network constraints. They usually require upfront payment and claims submission for reimbursement.

How can businesses offer competitive health plans for employees?

If you're wondering how to offer health insurance to employees, here are a few options to consider:

• Partnering with a professional employer organization (PEO) like G&A Partners is a great start. When you partner with a PEO, you enter into a unique relationship called co-employment. As co-employers to thousands of employees, a PEO, like G&A, is able to utilize their collective buying power to negotiate higher-quality plans and better rates on medical benefits, similar to what Fortune 500 firms offer. PEOs will also help you navigate complex regultory compliance related to your benefits and will handle benefits administration, including open enrollment, on your behalf.

• A benefits or insurance broker is a third party who will learn about the needs of your business, then research and shop for plans to fit those needs. Brokers typically work on commission and are ultimately paid by the insurance company you choose. They will also facilitate the application process, and some will help manage open enrollment.

• Another option is self-sponsoring a plan. This option requires your business to act as the insurer and directly provide benefits to your employees. You’ll need adequate cash flow, as well, since you’ll be assuming any risk associated with paying claims for your employees.

How can small businesses reduce health insurance costs?

In today's job market, employees want more affordable healthcare options, and small businesses can take steps to meet this demand while keeping costs manageable.

When providing health insurance for employees, here are a few ways to ease the financial burden for all involved:

• Help your employees choose the right plan for their needs by educating them on the various plan options and giving real-life examples of why a person would choose each plan.
• Educate employees that where they go for treatment impacts the costs for them (and the business). Show them how costs vary based on whether they utilize telehealth services, urgent care, or an ER.
• Emphasize preventive care, as early detection and treatment can reduce costs for many conditions.
• Pair health insurance with a wellness program that encourages a healthy lifestyle and incentivizes making healthier choices.
• Reassess your insurance needs prior to benefits renewals each year, then shop around for new quotes.
• Consider working with a PEO to secure more affordable, comprehensive benefits. Many PEOs like G&A also have lower rate increases from year to year, reducing your long-term benefits costs.