If you’re a small business owner, or someone looking to set up a new employee benefits plan, you’ll want to learn the ways to make the most of it , without breaking the bank. You’ve reached the right spot. We’ll break down how to make the most of your group benefits plan.
Group insurance is beneficial (pun intended), but it is a cost to your business, and escalating expenses may tempt you to cancel your benefits plan. Fear not, there are options available to help reduce the cost of premiums while still protecting your greatest asset – your employees.
Below are 6 primary ways to make the most of your group benefits plan:
A deductible is a specified amount that the employee must pay before the insurance company pays a claim. Deductibles can be annual, or per service, and be applied to one or more facets of your benefits plan, such as prescription drugs, paramedical services, or dental. The larger the deductible, the more the cost is contained, but the more your employees are out of pocket.
Common annual deductibles are $25/Single, and $50/family, and common per service deductibles are $5 per prescription.
Coinsurance is the percentage of an eligible expense that is covered by the benefits plan. For example, a coinsurance of 90% would mean that 90% of the expense is covered by the benefits plan while the remaining 10% is covered by the employee.
Coinsurance typically runs between 80-100%, and like deductibles, coinsurance can have different amounts that apply to different facets of your benefit plan. You can choose to cover 100% for prescription drugs, 80% for paramedical services, and 90% for dental. Or you can have one percentage across the board – it’s up to you!
Adding coinsurance or having a benefits plan that covers less than 100% of eligible expenses, makes the employee more aware of the costs of their claims, and as such, they are typically more reserved and price savvy with their medical expenses.
Due to the infrequent but high financial burden of out-of-country medical costs, it is recommended to reimburse these claims 100%.
Annual maximums mean that after an employee has claimed a specific dollar amount in covered expenses, they will be responsible for any further costs. Maximum dollar amounts can be placed on particular facets of your benefit plan, and are typically seen on paramedical services, dental, and medical supplies.
Keep in mind – putting maximums on elements such as prescription drugs and hospital expenses will mean that those in most need of the benefit plan your employee could be left with a cumbersome financial burden.
This defines who is eligible to be part of your group benefits plan. This is usually based on the number of months of continuous employment and/or a minimum number of weekly hours (ex: 3 months of continuous employment with at least 20 hours per week).
Companies with very low employee turnover may opt to have a one month (or shorter) waiting period, whereas companies with very high turnover could choose to have a waiting period of 6-12 months before an employee is eligible for benefits.
Remember, balance is the key. You can still offer a great group benefit plan to your employees while being mindful of your overhead.
Cost sharing is when the employee and employer share the cost of the benefits plan premium. It is mandatory that employers pay a minimum of 50% of the premium. They can choose to cover a larger percentage, so long as the minimum is met.
Choosing to implement a cost-share structure is a strategy that can be used when wanting to offer a benefits plan, without enduring the full premium cost. As time goes on, and budgets become friendlier, this can be increased or changed at any time.
When it comes to plan sustainability many companies take the more “modern-insurance” approach and chose to implement a hybrid type plan. A hybrid plan can include a “base plan” that covers catastrophic needs and prescription drugs, combined with a Health Care Spending Account that covers the “nice-to-haves” such as paramedical services, vision and other CRA eligible health and dental expenses.
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