Health insurance is one of the first benefits that a prospective employee learns about before they take a job offer from a small business. There is good reason for this: medical costs are rising through the roof and people are just as worried about coverage as they are about salaries. Since this is one benefit that has short term and long term implications, it is important to understand what small group health insurance is and how it can affect you if you take a job with a small business.
Small group health insurance is a way for employees of a company to receive dental, medical, and vision insurance at a cost that is less than what they would pay as individuals. Small businesses that provide health insurance to their employees are provide this benefit to help take care of the needs of their employees and compete with other businesses on the benefit playing field.
Categories of Plans
There are two major types of small group health insurance: HMO and PPO.
Health Maintenance Organizations (HMOs) – These plans will restrict who a patient can see and what services they can receive. Services must usually be rendered by an in-network provider in order to be covered with the insurance plan. The patient’s primary care doctor manages the overall care of the patient in the same manner as a case worker. Children can have a pediatrician as their PCP. When patients need tests, x-rays or any other care specialist or diagnostic care, they will need a referral from their PCP in order to have the service paid for by the insurance plan.
Preferred Provider Organizations (PPOs) – This type of plan requires that a patient be responsible for a deductible before the rest of their care is paid for, but they are free to see any physician in a specified network. Referrals are not required to see specialists or to have diagnostic services conducted. If patients require treatment from a doctor outside that network, they will most likely have to pay a higher rate and apply for reimbursement independently. For most small group health insurance plans, this is considered going out-of-network.
Group insurance is expensive, and small businesses pay a lot more money than their employees realize for health benefits. Between administrative costs and high premiums on plans when claims are made, insurance is a significant budgetary concern for small businesses. Whether a business is considering HMO or PPO health insurance for their employees, they should compare and contrast plans based on benefits and the cost to both the business and the employees.