Employer Health Coverage: Cost Control
Employer Health Coverage: Cost Control
Karleen M. Lindsey
HCR/230
May 9, 2014
Heather Csanky
Employer Health Coverage: Cost Control Health insurance benefits are a large factor that employees consider when looking for employment. Employers are looking to provide insurance that is cost effective for the employer. Choosing what type of insurance to provide can have different effects on the profitability of the employer. Here is a comparison of the cost effectiveness of employer-sponsored health care and self-funded health plans. In employer-sponsored health plans the employer buys health insurance from an insurance company. The human resources department manages the group health plan (GHP) and they negotiate costs and different coverage plans with the insurance company and then select what is offered to the employees. This helps the employer save money by negotiating for deals and choosing what will be offered to employees. The employer can carve out specific items during negotiations, like prescription drug coverage in order to save money. GHP’s also include riders. These are certain options that the employer doesn’t pay for. Riders are purchased by the employee directly from the insurance company to cover things like vision and dental services. GHP’s have open enrollment periods in which employees choose the coverage options they desire. This is the only time coverage changes can be made. Thus, the employer saves money during the year because insurances coverage isn’t constantly changing. Self-insured health plans are ones where they employer covers the cost of health benefits. This saves an employer money because they can set the premium rate on their claims history. Any money not used towards benefits can be saved and invested. If claims are above projected figures, stop-loss insurance will cover the difference not the company. Self-insured employers, many times will use third-party claims
Karleen M. Lindsey
HCR/230
May 9, 2014
Heather Csanky
Employer Health Coverage: Cost Control Health insurance benefits are a large factor that employees consider when looking for employment. Employers are looking to provide insurance that is cost effective for the employer. Choosing what type of insurance to provide can have different effects on the profitability of the employer. Here is a comparison of the cost effectiveness of employer-sponsored health care and self-funded health plans. In employer-sponsored health plans the employer buys health insurance from an insurance company. The human resources department manages the group health plan (GHP) and they negotiate costs and different coverage plans with the insurance company and then select what is offered to the employees. This helps the employer save money by negotiating for deals and choosing what will be offered to employees. The employer can carve out specific items during negotiations, like prescription drug coverage in order to save money. GHP’s also include riders. These are certain options that the employer doesn’t pay for. Riders are purchased by the employee directly from the insurance company to cover things like vision and dental services. GHP’s have open enrollment periods in which employees choose the coverage options they desire. This is the only time coverage changes can be made. Thus, the employer saves money during the year because insurances coverage isn’t constantly changing. Self-insured health plans are ones where they employer covers the cost of health benefits. This saves an employer money because they can set the premium rate on their claims history. Any money not used towards benefits can be saved and invested. If claims are above projected figures, stop-loss insurance will cover the difference not the company. Self-insured employers, many times will use third-party claims