Medical plans for small businesses can come in many forms depending on what a business needs and what is affordable. Medical plans can be purchased from a private insurer and can include a Preferred Provider Organization or a Health Maintenance Organization option. Another type of medical plan that can be used by a small business is known as a high-deductible health plan. Costs of medical insurance plans vary and can be controlled in a variety of ways.
- Many types of health insurance plans purchased by small businesses are known as indemnity plans. These types of plans often pay a percentage of medical costs after an individual has paid the required deductible. For example, a health plan that pays 90 percent of medical expenses means that an individual is responsible for the other 10 percent of the cost. One benefit of these types of plans is that they are flexible as to where health care can be received.
- Small-business indemnity health-insurance plans have the option of using a Health Maintenance Organization, or HMO. Individuals that are using an HMO are given a list of providers and are required to choose a primary care physician. The primary care physician is responsible for the health-care needs of an individual or family. Care needs to be received from a network provider within the HMO to have a claim or medical expenses paid.
- Indemnity plans used by a small business also have the option of using a Preferred Provider Organization, or PPO. Plans with the PPO option include doctors and providers that have contracted with an insurance company to provide services at a reduced cost. Unlike an HMO, individuals are not restricted from using a provider outside of the network. However, there may be higher costs such as co-payments that apply when a non-network provider is used.
- Small businesses that want to offer medical plans to their employees can provide an option called a high-deductible health plan. This type of plan provides low-cost coverage for a high deductible that be up to $3,000 or more. These types of plans can use a Health Savings Account, or HSA, that can be setup where pre-tax dollars are used for qualified medical expenses. Money in an HSA that is spent on a qualified medical expense is not taxed as income.
- Small businesses that want to provide a medical insurance plan to their employees will need to control the costs that are spent on coverage. Premiums for small group health-insurance plans can cost up to $400 or more a month per employee. Insurers' prices can vary but costs can usually be decreased when a high deductible is applied to the policy.
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