Group Medical and Dental
Group medical plans are available to employers who have at least two employees. Small group is generally considered to be those companies with fewer than 50 employees. The plans for these groups are standardized and rates are based on a number of factors including: ages of employees and dependents, number of dependents, participation, contribution, and longevity with the current carrier, tobacco use, geography and small adjustments for claims experience.
Companies who have 51 or more employees have additional factors including a heavier weight on utilization and industry. Large groups can have more flexibility in plan design.
There are several different types of medical plans: Traditional, HMO, PPO, and Health Savings Account (HSA), Health Reimbursement (HRA).
HMO plans, the employee pays a co-pay for services at the time they are rendered. The rates tend to be lowest for HMO plans.
PPO plans are more flexible. You do not need to coordinate all your care through a PCP, but you do get a better benefit if you use the providers on the PPO panel. Some services may require a co-pay, other services may require a deductible that must be satisfied before benefits are paid. These plans are generally more expensive than the HMO plans.
Traditional plans allow you to see any licensed medical M.D. or D.O. of your choice without a referral. There is no change in the benefits regardless of what provider you use. These plans tend to be the most expensive.
Health Saving Account plans require a plan that meets the Federal guidelines to be eligible. These plans are high deductible plans and when they qualify you can set up an investment account similar to an IRA to pay for medical expenses on a pre tax basis. The investment income is accrued tax free. The money must be used for medical expenses. Any money left over at the end of the year can be rolled over each year. If you spend the money on non-qualified medical expenses you will pay a 20% penalty along with your ordinary income tax on the money used.
Health Reimbursement Accounts are Internal Revenue Service (IRS)-sanctioned programs that allow an employer to set aside funds to reimburse medical expenses paid by participating employees. Using an HRA yields “tax advantages to offset health care costs” for both employees as well as employers. Typically these are set up with high deductible plans.