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GROUP
HEALTH INSURANCE
Health Insurance is one of the most important
benefits employers provide to employees, since employees depend on and use their health benefits frequently. The cost of providing this benefit often represents a significant part of most group medical plans. It is important to distinguish the different types.
PREFERRED PROVIDER
ORGANIZATION (PPO)
Similar to indemnity/fee
for service, but with a network of provider physicians and hospitals. You are
free to choose a physician or hospital from a preferred provider list. When you
use preferred providers you will pay less in deductibles, co-payments, and co-insurance than if you use providers who are
not in the network.
HEALTH MAINTENANCE ORGANIZATION
(HMO)
A Primary Care Physician (PCP) must be selected from the HMO network
at the time of enrollment. This PCP will manage all medical/ health care. In order to see a contracted specialist or receive services from a hospital a referral
must first be obtained from the PCP. The only exception to this is in the case
of a life-threatening emergency. No benefits are provided if you go outside the
network of HMO providers. The co-payments you are responsible for in an HMO are
typically very low.
GROUP
LIFE INSURANCE
Group Life Insurance and accidental death and
dismemberment are incorporated in most employee benefits plans. The amounts can
vary widely from employer to employer. The employer could elect a flat amount
such as $10,000. The coverage amount could also be based on the employee’s
salary: 1, 2, and 3 x the employee’s annual salary.
In addition to the group basic life insurance
the employer could allow the employees to purchase additional coverage. This
coverage is often referred to as supplemental coverage.
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GROUP SHORT TERM & LONG TERM DISABILITY
Disability benefits are payments that provide income when an employee can no longer work due to an
illness to non-work related accidents. Short-term disability covers a percentage
of an employee’s income (typically 67-70% monthly benefit) to a maximum duration of 13 to 52 weeks. Long-term disability coverage normally will provide benefits to age 65 while providing
60 – 70% of an employee’s monthly income to some specified amount. Contract
language and definitions of disability can vary widely from carrier to carrier and from liberal to stringent.
VOLUNTARY
LIFE
Voluntary Life Insurance allows the employee to purchase various amounts of life coverage at his
or her own expense. This coverage is normally inexpensive. The premiums are paid 100% by the employee on a payroll deduction basis.
GROUP
DENTAL INSURANCE
Today over 55% of all business’s
offer dental insurance, either totally or partially paid by the employer. Like
group medical insurance, dental can be indemnity/fee for service or the newly evolving Preferred Provider Organizations (PPO)
and Dental Maintenance Organizations (DHMO), which work like group medical HMO’s.
All dental plans emphasize preventive care while many provide coverage for major procedures and orthodontia.
GROUP
VISION
Another new, evolving and popular benefit is vision care. Vision plans can be either indemnity/fee for service provider organizations (PPO)
or discount programs through selected retailers. Vision plans can be implemented as a voluntary product and/or an employer
paid benefit.
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SUPPLEMENTAL
COVERAGE
Supplemental coverage provides the employee the ability to purchase
additional coverage at his or her own expense. The cost can be deducted from
the employee’s paycheck and can possibly be pre-taxed through a Section 125 plan.
Supplemental coverage’s could be Cancer, Accident, Hospital Indemnity, and ICU policies.
SECTION 125
A Section
125 Cafeteria Plan allows employees to choose from qualified benefits, providing tax savings to both the participating
employees and to the employer. The tax advantages of a cafeteria plan come from
Internal Revenue Code 15, which was added to the Code by the Revenue Act of 1978.
Premium Only Plan (POP) is the most
popular use of a cafeteria plan that allows employees to pay their share of the cost of medical coverage with pre-tax salary
dollars.
Flexible Spending Accounts are individual employee accounts that allow employees to be reimbursed for
certain health care expenses The annual maximum that an employee may contribute is determined by the employer each plan year.
Dependent Day Care allows the employees to pay for dependent
care expenses for eligible adult or adolescent dependents. The I.R.S.
determines the annual maximum amounts.
Each year that the plan renews is called an
Open Enrollment. The Open Enrollment allows the employee to make any changes
such as dropping or adding products, and/or dropping or adding dependents. Changes
can only be made at the annual Open Enrollment. The only other time that an employee
can make changes during a plan year is if there is a Change In Status.
If an employee has a Change in Status during
a plan year, which is a death, birth, adoption, marriage, divorce, and etc., then this would allow the employee to make changes
that are consistent with the Change In Status.
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