With open enrollment approaching for many businesses, it’s a good time to take stock of the general options for NJ group health plan members.
Many NJ carriers offer Health Maintenance Organization (HMO) plans. With an HMO, you choose a primary care physician (PCP), who directs your medical care and gives you referrals when you need to see specialists. However, modern HMO’s come with a no-referral option, if you’d like to be able to see a specialist without a referral. With an HMO, you must go for medical care within your plan’s network or you won’t be covered (except for Emergencies).
Most carriers also offer Point-Of-Service (POS) and Preferred Provider Organization (PPO) plans, which provide an out-of-network benefit (if you have to see providers who don’t take insurance). In-network, these plans work very similarly to an HMO. For dental plans, an out-of-network benefit is more important, since NJ dentists are more selective about which networks they use.
NJ medical plans can be structured in such a way that they are compatible with Health Savings Accounts (HSA’s). The premium for this type of plan is lower, since the plan has a broad deductible that must be met (except for Preventative care) before the carrier subsidizes claims. Employees can open an HSA (typically at a bank) to put tax-deductible money (e.g. the premium savings and/or an employer-match, if applicable) to cover the plan deductible and other qualified medical, dental and vision expenses. The HSA money belongs to the employee and can carry over from year to year.
Alternatively, some employers will use an HSA-compatible health plan to establish an IRC Section 105 Health Reimbursement Arrangement (HRA) for their employees (in this case, employees can NOT open HSA’s). The employer will use the premium savings from the health plan to insulate their employees from the plan deductible, by reimbursing qualified employee claims on a tax-preferred basis. If the employees are typically healthy, this can save money for both employer and employees.
Wellness and advocacy plans are especially valuable to a company and employees when HSA-compatible health plans are used, since reduced claims lead directly to savings to the participants. A bigger component of savings is Productivity (including less sick days, etc.) due to reduced absenteeism and presenteeism. A lesser-known fact is that a good vision plan doubles as a great wellness benefit! An annual visit to a qualified vision provider can not only correct vision, but also can head-off some serious medical conditions, including diabetes.
Prior to open enrollment, it’s a good idea for employees to evaluate potential health care needs. Knowing past history can help plan for the future, so employees should review past claims (medical, prescription, dental, vision) and costs (both co-pays and the total cost of each claim). To get a view of the future, employees should consider whether the claims were predictable (including chronic conditions) or unpredictable (emergencies)? Knowing this type of information is very helpful for evaluating options at the time of open enrollment and/or to ask for options from carriers and brokers.
An employer should start considering employee benefits plan needs roughly two-months prior to the plan anniversary. The employer should survey employees to consider their demographics, expected utilization and special needs. The employer should establish a budget for benefits, considering carefully what employee contribution might be required to maintain ample participation in the employee benefit plans. With the help of a broker, the employer should consider offerings by competitive, high-quality providers as an alternative to the existing plans. Before making any changes, employer and employees should be aware of what they will be getting, compared to their current benefits. At the end of this process, the goal is for the employer to continue to have loyal, motivated employees who are happy that they are getting the best value for the healthcare investments.
An experienced broker can help with all aspects of this process, from checking health plan prices, to helping employees understand their options.
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- What Is The Process At Policy Renewal/Plan Anniversary?
- How Can A NJ Benefits Specialist Help?