Health Insurance Information for Business Owners Every small business owner has unique health insurance needs. That's why it's important for you to make an informed decision about the health insurance coverage you choose for yourself and your employees. Small Group Health Insurance   "Small group" refers to the number of employees (sometimes 1 , but most often between 2 and 25, and sometimes up to 100) covered under a company's group insurance plan. In the small-group market, health insurance prices are based mainly upon two factors. The first is the expected cost of medical services in a given geographic area; the second is the projected utilization of services. Insurers usually estimate the probability of an insured using medical services based upon factors such as age, sex, and medical history. These factors influence an insurer's charges to you and your employees. Those individuals who are considered a greater risk will often pay a higher premium for insurance. Of course, premiums are also affected by the type of benefit plan chosen. Most small-group health insurance companies use a method called underwriting. An underwriter analyzes a number of risk factors, including the medical history of each individual, to try to predict claims and thus to determine the group's insurability. The insurer's goal is to offer coverage at a price that is fair to the insured group and to ensure adequate income to pay future claims and other expenses. Private Commercial Insurance Options   There are many options for small-business employers. It's important to be aware of the pros and cons of each choice when selecting a plan. While premiums can vary among different carriers, recognize that there can be substantial differences in the benefits and in what your employees must pay out-of-pocket for medical services. 1. Managed Care   Managed care integrates the financing and the delivery of health care services. Managed health care plans are becoming more common among small groups. Today, more than 70 percent of Americans who obtain health insurance through their employers are enrolled in some type of managed care plan. Most managed care plans share the following basic characteristics: •  Arrangements with selected doctors, hospitals, and other providers to furnish a comprehensive set of health care services to members. •  Explicit standards for the selection of doctors and other health care providers. •  Formal programs for quality assurance and utilization review. •  Significant financial incentives for people participating in the plan to use the providers and services associated with the plan. A. Health Maintenance Organizations (HMOs)   HMOs provide, or ensure delivery of, health care in a certain geographic area; they offer an agreed-on set of basic and supplemental health-maintenance or treatment services to a voluntarily enrolled group of people in exchange for a set premium. There are generally no deductibles and no (or minimal) copayments. The HMO bears the risk if the cost of providing the care exceeds the premium received. There are now several types of HMOs, among them: •  The staff model, where providers are directly employed by the HMO. •  The group model, where medical groups contract with the HMO. •  The independent practice association (IPA), where the HMO contracts with physicians in independent practice or with associations of independent physicians. IPA physicians frequently have arrangements with more than one HMO. •  The network model, in which the HMO has arrangements with many providers in a locale. B. Preferred Provider Organizations (PPOs)   A PPO typically consists of groups of hospitals and providers that contract with employers, insurers, third-party administrators, or others to provide health care services to covered persons and to accept negotiated fees as payment for those services. The cost is lower than under a fee-for-service plan because providers accept discounted fees. Some of the different arrangements are: •  Third-party-payer PPOs, which include those initiated by commercial insurers and Blue Cross and Blue Shield plans. •  Hospital-sponsored PPOs, which often include a network of institutions and many of the physicians on their staffs, and that cover a wide geographic area. •  Physician-sponsored PPOs, which are developed by local medical societies, other local professional associations or clinics, or groups of physicians. •  Employer or labor-sponsored PPOs, which contract directly with providers on behalf of their employees or members. •  PPOs developed by non-hospital and non-physician providers, such as dentists, optometrists, pharmacists, chiropractors, and podiatrists, through their professional associations, local groups, or clinics. 2.  Fee for Service   Fee-for-service is the traditional form of health insurance. Fee-for-service plans enable you to choose your own physicians and hospitals. Most of these plans require deductible and coinsurance payments. Simply put, coverage results from your insurer's paying "reasonable and customary" or usual charges (i.e., reasonable compared with other providers in the same geographic area) for physician and hospital services. Typically, fee-for-service coverage for employer-sponsored health insurance has been characterized by three major features: •  Employers and employees share the premiums. •  Employees have complete freedom to select any medical care provider. •  The insurance company pays the allowable claim. Fee-for-service coverage dominated employee benefits packages for many years. In the past, fee-for-service coverage often did not include cost containment provisions, and the major advantage of these plans was the freedom for the consumer to choose providers. Today, however, many fee-for-service plans also offer a wide variety of cost containment features. These plans can hold down costs for both the insurance company and the business owner, as well as encourage consumers to be efficient users of medical services. Examples of managed care features that may appear in a fee-for-service plan include: •  Case Management •  Second Surgical Opinion •  Centers of Excellence •  Special Benefit Networks •  Pre-Admission Certification •  Utilization Review Sheffield Group Health Plans Atlanta/Buckhead Norcross/Marietta (404) 351-4775 Fax:  (404) 351-4771 (770) 980-0046 sheffins@bellsouth.net [ Company Overview ] [ Employer Insurance Info ]  [ Contact Us ] [ Insurance Quote ] [ Favorite Links ] Copyright © 2000 All Rights Reserved. Intelligent Media Ventures, Inc.