Definitions
- Group Plans:
In NH, business groups may be as small as one employee.
- "OOP"
Out Of Pocket expenses, describing individual expenses not covered by
the insurance plan. A Doctor visit co-pay for example, is an OOP
- HMO:
"Health Maintenance Organization" where care is provided via a defined
network of doctors and hospitals. Typically, "benefits rich"
- POS:
"Point of Service", a combination of HMO with coverage for services
received from outside the network; non-network benefits subject to
restrictions and higher out of pocket costs.
- PPO:
"Preferred Provider Organization", a physician driven network providing
services at discounts while covering non-network delivery as well.
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HSA:
Health Savings Account; lower premiums with tax advantages.
- HRA:
"Health Reimbursement Account", a Group variation of HSAs.
- FSA:
"Flexible Savings Account", an employee funded medical savings plan where contributions are tax deductible,
but are on a "use it or lose it" basis.
- Section 125:
Section of the IRS tax code that allows for employee portions of benefit premiums to be deducted
pre-tax from payroll. Employee saves an amount equal to their personal tax rate while both employee and
employer save the Soc Sec tax amount.
- Cafeteria Plans:
Where an employer provides an array of benefits and assigns each employee a defined employer funded budget.
The employee decides how to disburse their budgeted amount and may elect to expand benefits through
their own contribution. Almost always combined with a Section 125 to provide greater dollar leverage.
- Optional Supplemental:
A comprehensive array of supplemental benefits aimed at covering gaps in insurance coverage.
These are administered by a 3rd party and bear no cost to the employer.
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Current Status in New Hampshire
Since 2004, Group Health insurance has been whip-sawed by a series of bills passed in Concord. We have migrated from
guarantee issue with no caveats, to a complicated formula for underwriting, to now no health underwriting at all. In just
three years, groups have watched their premiums swing from as much as a 25% decrease to
consecutive years of 35%+ increases.
By the end of 2007, barring any more radical changes in Concord, group premiums should be
relatively stabilized.
In the meantime, there have been two important developments in available products. The intent is to offer groups product
alternatives aimed at keeping premiums in check. They are (1) HMO Products
restricted to just New Hampshire service delivery
doctors and facilities and (2) rollout of CDHPs (Consumer Driven Health Plans).
N.H. Only HMOs
Anthem's Mathew Thornton, Cigna's all new HMO 1-10 products, Harvard Pilgrim's
restricted Best Buy products, and all of MVP's
plans, offer premium savings by not including doctors and facilities most
notably in Massachusetts.
(HP's plans do include a few Mass. facilities.)
While these plans do offer some comparative savings, there is a huge risk
attached. By all accounts, eight (8) of the best care and research hospitals in America are located in
the greater Boston area. The real purpose of health insurance in the first place is to cover the costs of catastrophic
accident and illness with ideally, survival as the objective. Disallowing covered access to some of the best care
facilities in the world could become its own catastrophe.
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Proof Points
Case #1: Covered dependent suffers serious accident at home. He's rushed to one of the leading NH hospitals which
stabilizes him and then immediately air-vacs patient to Mass General for specialized care. Over course of recovery, Mass General
medical bills approach $1,000,000.
Fortunately, patient is covered by plan that includes Mass General.
Case #2:
Covered dependent diagnosed with life threatening illness.
Necessary medical services performed by Mass.
specialty hospital. In force health plan is of the "restrictive" variety.
Family is hit with more than $100,000 in out of
pocket expenses.
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A tax levied on health insurance premiums helps fund a high risk pool where
chronically ill individuals may be subsidized to help control group
premiums.
HMO:
The HMO has been the dominant style plan for small groups in New Hampshire for the past ten years. Originally, the HMO was an attempt to control health care costs and thus provide more affordable premiums. However, it has evolved to a benefits-rich style plan with a naturally higher premium average than imagined with the original design.
While there are numerous areas of dissatisfaction including restricted choice and in some cases, roadblocks to needed care, most people are happy
with the care they are receiving. Furthermore, many people have come to expect the convenience of low office visit co-pays and no claims paperwork.
If companies are to get their health insurance costs under control, there will have to be some rethinking done regarding the style and nature of the plan they use. The days of the low OOP plan fully employer paid, are all but over.
POS:
Point of Service style plans satisfy the need for more choice in HMO style plans.
It is an HMO design but with out-of-network protection. Cigna's new Open
Access Plus plans combine their national network with freedom of
choice.
PPO:Preferred Provider Organizations are typically larger than the HMO network. The primary differences are that the PPO is far less restrictive on how the medical profession is compensated, and the out of network features reduces even further the control on costs.
HSA:
It is estimated that since their inception, more than 30 million
Americans have enrolled in Health Savings Account style plans. This has
quickly become the most popular
version of the new CDHP (Consumer Driven Health Plans). HSAs are enabled
by congressional act and the rules are administered by the IRS. The
motive is to encourage more people to acquire health insurance by lowering
the costs and sweetening the deal with tax breaks. Companies moving from
rich HMO plans to HSAs may reduce their premiums in extreme cases by as
much as 50%!
There are still many people who do not fully understand the workings and advantages
of HSAs. Hit the
 button for an in depth description of how HSAs work. HRA:
The Health Reimbursement Account is a variation of the HSA design where the employer
commits funds as needed to offset all or a portion of the employee's out
of pocket expenses. This makes a great deal of sense where the monthly insurance premium reduction is such that the HRA contribution still leaves expense savings for the employer.
The company expense is a variable vs. a fixed cost such as an across the
board HSA contribution.
FSA:The Flexible Savings Account is employee driven where they determine in advance how much they want to have deducted from their pay to deposit into the FSA. These funds are available to cover many out of pocket expenses, including coverages not available to them through their employer plan, dental being a good example. However, this requires planning and oversight on the employee's part since the funds are in a "Use it or Lose it" account. Now, with the advent of HSAs and HRAs,
the FSA style may be a less attractive alternative.
Partial Self Insured Plans
This is a complex topic. For some groups, it may be a way to gain more
control over benefits and expenses. There are risks however. For a more
comprehensive description of how these plans work and if they might be
right for you, hit
- Optional Supplemental:
While this topic could appear under any one of several benefit
subjects, the changes in group health plan options suddenly makes these kinds of plans a valuable tool in controlling premium costs. Combining
optional plans, such as Hospitalization or Accident coverage can close
the gaps created when choosing a higher deductible plan. With careful planning, the net package could have greater benefits at an overall lower cost. This topic is covered in much greater detail on the
AFLAC page
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