The one thing almost every employee wants and needs is health insurance. The most common plans are health maintenance organizations (HMOs), preferred provider organizations (PPOs), point of service (POS) and indemnity plans. Another option is a health savings account (HSA), which is a tax-free medical savings account that must be paired with a high deductible health insurance plan (HDHP).

Chosing the right plan for you and your employees is a complicated decision. The Patient Protection and Affordable Care Act, which was signed into law in March 2010, made significant changes to the health insurance industry. Many provisions are complex and not yet clearly defined by the federal government. Many more are subject to both state and federal rules and regulations that are still to be determined. Because of the changing requirements that employers must follow, many to be phased in from now until 2018, it makes sense to consult with a benefits professional who can guide you through the process.

Self-Funded vs. Insured:

All group medical benefit plans fall into one of two categories: self-funded or insured. The choice of one over the other should not be made arbitrarily. Each type carries its own set of administrative rules and legal constraints.

What is Self-Funding?

Under an insured health benefit plan, an insurance company assumes the financial and legal risk of loss in exchange for a fixed premium paid to the carrier by the employer. Employers with self-funded (or self-insured) plans retain the risk of paying for their employees’ health care themselves, either from a trust or directly from corporate funds.

The risk assumed in either situation is the chance that employees will become ill and require costly treatment. When employees have few claims and few expensive illnesses, the self-funded employer realizes an immediate positive impact on overall health care costs. Conversely, if the employee group has unfavorable claims experience, a self-funded employer would incur an immediate expense beyond what may have been expected. Insured plans have a more predictable cost for the year; however, large employee claims costs from one year can affect future premium amounts

Vision:

Vision benefits are often overlooked in a typical benefits package, but they can be incredibly beneficial to employees. Offering your employees vision insurance can encourage necessary eye care and help supplement costs for vision needs. In addition, regular eye doctor visits can identify otherwise unknown medical problems, lowering cost and improving treatment when those problems are caught early on.

Dental

Although long-insulated from employers’ cost-cutting efforts because of their low price, the rising cost of health coverage is now affecting dental benefits, according to industry experts. Troubled by high rates of inflation in their medical plans, some employers are scaling back on dental benefits. This is not necessarily the best move for employers, as workers tend to see the value in solid dental care. Many people make a positive connection between overall good health and maintaining their oral health. In addition, those with dental benefits may have brighter view of their health and well-being in general. Dental benefits may seem like just another expense, but the risks of not providing dental benefits could be more costly-including significant medical expenses that could have been avoided and difficulty hiring premium talent due to a lacking benefits package.

Life Insurance- Employer-Sponsored Coverage

Employer-sponsored coverage can be offered in a variety of ways. Employers may offer a term policy, permanent coverage or both. Cost-sharing also varies, as some employers cover the full cost, some require employees to pay the full premium and others split the cost with employees.

A common scenario is an employer offering a group-term policy at no cost to the employee, with a coverage amount that is a multiple of annual salary (usually one to five times annual pay). Group-term policies often end when an employee leaves the organization (or dies), but employees may be able to convert it to a permanent policy or renew it upon leaving. This is generally an affordable plan for employers to offer, though it does not offer as much long-term value to employees as a permanent plan.

Many employers who offer such a group-term policy also offer additional voluntary coverage options, in which the employee pays the full cost but still realizes the benefit of group rates and payroll deductions.  Additional coverages offered may include:

• Spouse/dependent life insurance (group-term policies only cover the employee)
• Supplemental term life insurance (to elect a higher amount than the employer offers)
• Supplemental permanent coverage (a whole, universal or variable life policy in addition to the term policy)
• Accidental death & dismemberment (AD&D) coverage

Long-term disability insurance (LTD):

LTD is a type of disability insurance coverage that pays employees a set percentage of their regular income after a specified waiting period. For example, if a worker is covered under short-term disability (STD) insurance as well, the LTD insurance would kick in once the STD policy is exhausted, typically after 3 to 6 months.

LTD insurance protects workers in the event they become disabled for a prolonged period prior to retirement. LTD policies are often offered through employers as part of a standard benefits package.

The length of LTD plans vary, some may be limited to a period between 2 and 10 years, while other plans continue paying out until age 65.

Short-Term Disability Insurance (STD):

STD is a type of disability insurance coverage that can help you remain financially stable should you become injured or ill and cannot work. Usually, STD coverage begins within one to 15 days of the event causing your disability. The coverage allows you to continue to receive pay at a fixed weekly amount or a set percentage of your income.

401(k) plans help employees save for retirement by allowing them to set aside a portion of their salary that is often matched in whole or in part by their employers.  Employees can select where they want to invest their funds and they are not taxed on this income until withdrawals are made.  Employers’ costs are a tax-deductible business expense.  Sometimes employers elect to integrate the 401(k) plan with a discretionary profit-sharing plan that can increase the employer’s retirement contribution for employees.

This option is for employers with 100 employees or fewer who do not maintain any other retirement plan.  It allows an employee to contribute a percentage of his or her salary up to a fixed maximum to an individual retirement account (IRA).  The employer may also make contributions on a fixed or matching basis, which are tax deductible.  SIMPLE plans are easy to set up, require minimal paperwork,and have low administrative costs.  Plus, employees retain their SIMPLE account when they change jobs.

Created with the small business owner in mind, SEP’s allow employers to set up IRAs for themselves and their employees.  The employer contributes a percentage to each employee’s salary each year, up to a fixed maximum, and those contributions are tax deductible.  SEPs have low administrative costs, and can even be started by those who are self-employed.  Since the business owner can decide how much to contribute each year, this type of plan is often the answer for businesses that my want to adjust their contributions based on the health of the business.

Commonly known as pension plans, require employers to pay a fixed annual amount to eligible employees, during their retirement years.  These allow employers a high degree of tax savings, and in good times, favorable growth rates can reduce or eliminate the employer’s contribution.  However, they can be costly to administer and may require higher contributions in times of poor or negative investment returns.  For employees, they provide the greatest degree of retirement income certainty since they take on virtually no risk.