John has been running a small landscaping business in Texas for the past four years. As his business grew, so did the number of employees, and John realized it was time to offer health insurance benefits to maintain a happy and healthy workforce. He decided to purchase a Bronze level plan from the ACA Exchange, which seemed cost-effective given his budget constraints. He thought it was a lifesaver in keeping the health insurance premiums manageable for his business and providing access to health coverage for his employees.
However, during the busy season, one of his key employees, Dave, got injured one weekend while doing work around his house. Dave's injury required an emergency room visit, where he got excellent medical care. But when the bills started arriving, everyone was in for a shock. The annual deductible for Dave’s coverage was over $7,000, a fact John had not fully grasped when choosing the policy. Dave’s medical bills were staggering considering his household costs, putting a significant strain on his family finances.
High deductibles on business health insurance plans can create a hefty financial burden for employees of small business owners who are trying to provide health benefits without breaking the bank. The increasing costs of medical services in Texas has meant that health insurance companies have been raising deductibles which doesn't seem to be slowing down at all. These high health care costs and the associated out-of-pocket costs can escalate quickly for folks like Dave. For conscientious employers like John, they can be left grappling with the stress inflicted on their employee's financial health. What is he supposed to do?
Health insurance deductibles define how much you pay out-of-pocket before your medical plan starts covering medical expenses. The purpose of a deductible is to share some of the financial burden of eligible expenses and encourage judicious use of medical services on the policyholder's part. However, high deductibles can deter employees from seeking necessary care, which could lead to bigger health issues and more significant expenses down the line.
Assuming that employees like Dave do seek in network care, the insurance policy starts covering a portion of the medical costs after the deductible is met. At that point, the plan will be sharing healthcare costs with Dave until he hits the out-of-pocket maximum. Once this limit is reached, the insurance takes over, covering 100% of in-network services. Many small business owners like John may not fully understand these nuances, and forget about this intermediate part of healthcare coverage. This can lead to unexpected costs and financial stress.
Working with an experienced health insurance broker can help owners like John navigate these complexities and find business plans to fit both their budget and the employee's needs. They can review your plan thoroughly, explain deductibles, out-of-pocket maximums, and other potential expenses, ensuring you find a plan that is better for both parties.
Health plans come with a variety of deductibles and out-of-pocket maximums. Not all coverage plans are designed to burden policyholders with high costs. While some plan options can feel especially expensive, there are options with lower deductibles. Regular metal tier plans like Bronze, Silver, and Gold offer a mix of deductible levels and out-of-pocket limits.
John’s experience highlights the confusion small business owners face when selecting health insurance. The myriad of available options can be overwhelming, often leading to choices that don’t align well with the business's financial health. It's important to balance monthly premiums, employer contributions, and out of pocket costs against the actual benefits provided by the insurance plan.
Understanding the out-of-pocket expenses associated with your health insurance plan is essential. These include deductibles, copayments, and coinsurance, which vary depending on the type of plan. For example, doctor visits may have a copayment, while hospital stays might incur higher costs due to cost-sharing up to the policy maximum.
Not all medical expenses count towards your deductible or out-of-pocket maximums. It's vital to know which costs contribute to these thresholds since provider networks can shift dramatically from one plan to the next. Regularly reviewing the network doctors and facilities of any health insurance plan you're considering helps you to understand the coverage and associated costs. This enables more effective management of medical expenses. This will allow the true cost of health insurance and the care it helps provide makes sense for both you and your employees.
Despite having a high deductible plan, small business owners can still help employees manage medical expenses effectively. Understanding some basic principles of plan costs can help them shift some attention away from the health insurance costs. Here are some strategies:
1. Prioritize necessary medical appointments: Make sure your employees understand the importance of regular check-ups and preventive screenings. These appointments can catch potential health issues early, preventing more significant expenses later. And these preventive care services are usually provided with no out of pocket costs to them.
2. Explore cost-effective prescription services: The cost of prescription drugs is one of the biggest expenses that many insurance plans face. As a result, this is where many health insurance companies attempt to shift these health care costs to employees. Generic prescriptions, even if they are not using their insurance plan to obtain them, can be a help in keeping costs down.
3. Look At Supplemental Indemnity Plans: As health care costs have risen, some employers have looked at the premium cost of supplemental plans that provide cash for health coverage costs. These affordable health insurance plans provide cash against the employee costs and can be a lower cost addition to a benefits package that provides great value to them.
While these tips will not lower the deductible outright, they can help employees like Dave manage cash flow and reduce the overall impact of health insurance expenses that come up throughout the year. It can also help keep business expenses down and employee morale high.
When faced with high deductibles, consider exploring alternative insurance plans. While limited benefit plans and indemnity health plans can significantly reduce out-of-pocket expenses, considering options like self-funded plans can help limit out of pocket costs rather than lower their effect. When business owners like John work with an experienced independent health insurance who is experienced in all of the options available, they can create a customized plan specifically for your needs. True Texas Health Insurance does this for churches and businesses over the state of Texas.
Insurance For Texans is here to ask questions first, and then find solutions to your health insurance coverage dilemmas. Our experienced professionals are here to help with traditional group health insurance plans and alternative types of health insurance plans that can work for businesses of all sizes.
Click the button below to start your journey to finding the right employee health insurance plan today.
Let's get you covered,
Kevin Hall