The Basic Types of Business Health Insurance

Having the protection of health insurance is important for small or big businesses because it covers the healthcare needs of both the employer and the employee. But buying health insurance is not as easy as it sounds. Business health insurance in the United States is a complicated quagmire of competing insurers, plans, policies, and laws. Often a business's ability to provide affordable business health insurance coverage is dependent on the location of the business. State laws may also affect business health insurance choices. But in order to be able to retain employees and competitive, your business must offer some level of health insurance at some point. Almost 67 percent of the workers in the country are covered by some form of employer sponsored healthcare coverage. An employee will generally look for a company that offers this kind of benefit that is why more and more businesses are offering them. A skilled worker will surely choose an insured employer over uninsured ones.

There are generally four basic types of business health insurance offered by business insurance companies. Traditional or indemnity insurance, health maintenance insurance, preferred provider insurance, and Medicare.

Traditional or Indemnity insurance is the traditional health coverage offered by an insurer for a premium allowing the insured to pick any health care provider and to have the costs reimbursed by the insurer. This was the most common form of health insurance many years ago but today it is practically non-existent. If you need small business health insurance, this kind of coverage is not a rational option.

Health Maintenance Organizations or HMOs are organizations of doctors, hospitals, and health care providers that have arranged with an insurer to provide medical care at a lower agreed rate. The HMO model of coverage uses a primary care physician (PCP) to coordinate an insured's care under the plan. The PCP may refer to a specialist if necessary and must always approve any care of the member. The member is limited in their choice of hospital, doctor, and other services to those that are in the HMO, Because of economies of scale, and the management of care, premiums are generally reduced.

PPOs or the Preferred Provider Organizations are in some aspects similar to HMOs, but often more restrictive. In an HMO there may be two or more within its network. In a PPO, an insurer typically has a specific group of hospitals and physicians. The insured will have a PCP but all care must occur within the network. If an out of network care provider is used, the member will be responsible for most, if not all, payment for the services. PPO premiums are reduced, but so are the health care options available.

Medicare and Medicaid is government insurance available to persons over 65, incapacitated, or in late stage renal failure. If you have employees in your business that are over 65, they may require supplemental insurance coverage. Medicaid is government insurance for the very poor and the disabled.

There are many variations of plans, but most follow the four models or combine two or more for their business health insurance needs. The employer may opt to provide business group insurance or individual insurance.