According to the 2006 Health Confidence Survey conducted by Employee Benefit Research Institute (EBRI), employment-based health benefits are rated higher than cash – 75 percent of the respondents with employment-based health benefits stated they would prefer $6,700 in employment-based coverage to an additional $6,700 in taxable income.

Today, many businesses are making health insurance offering a priority. Obtaining good health care is high on the list of reasons why people work; therefore, offering quality health care coverage is essential for businesses that want to attract and retain great employees.

Purchasing the Right Coverage Requires Extensive Research and Careful Planning

What is covered?

Finding the right health care plan can be a time-consuming and overwhelming task for a small business. There are many variables to consider; however, the most important ones are what coverage is available to the employees and what are the associated costs. A participation requirement is another factor to keep in mind as most insurance carriers require at least 75 percent participation (requirements vary depending on the state).

A typical plan may cover most of the following:

• Doctor visits
• Hospitalization
• Surgery
• Injury
• Illness
• Prescriptions

Premiums, deductibles and co-payments

There are three types of fees associated with a healthcare plan: monthly premiums, deductibles and co-payments. Generally, the more the business owner and their employees agree to pay, the more coverage is available. A higher deductible (the amount employees pay out-of-pocket before the benefits apply) will lower the monthly premium. Co-payments are another factor that influences the insurance premium — the higher the co-payment or co-insurance, the lower the monthly premium, and vice versa.

Types of health insurance plans

Employers have several choices when shopping for a health insurance plan. The most popular types of plans include health maintenance organizations (HMOs), preferred provider organizations (PPOs) and point-of-service (POS) plans.

The greatest advantage of belonging to an HMO is cost. HMO premiums are generally lower than the premiums for other managed-care plans and HMOs feature lower co-payments. The primary disadvantage of an HMO plan is that it can be restrictive.

Employees are required to select a primary care physician who must be a member of the HMO — they may need to switch doctors to those that are in the network.

A PPO is less restrictive than an HMO allowing an employee more control over healthcare decisions; a PPO also usually has a higher premium than an HMO. PPO members will be reimbursed for utilization of nonpreferred providers, but at a reduced rate that may include higher deductibles, higher co-payments, lower reimbursement percentages or a combination of these elements.

A point-of-service (POS) plan is a type of managed healthcare system that combines characteristics of the HMO and the PPO. Like an HMO, a client’s employees do not pay a deductible and usually only a minimal co-payment applies when using a healthcare provider within the POS network. If they choose to go outside the network for healthcare, the POS coverage functions more like a PPO. Employees will likely be subject to a deductible, and the employee’s co-payments will be a substantial percentage of the physician's charges.

Health insurance made simple

As a CPA, you have a tremendous opportunity to assist your clients in looking for a company that can handle the administrative chores for benefits, thereby keeping the client’s overhead costs at a minimum.

Paychex Agency, Inc. is well-positioned to assist you and your clients. The agency works with over 150 carriers that your clients can trust, and they will benefit from our licensed agents helping them choose the right plan that fits their needs.

Help your clients by informing them of the many benefits provided by Paychex Agency, Inc. and the Paychex Health Insurance Administrative Services. Your clients will be able to:

• Gain access to group rates not only for health insurance, but also, dental, life, short- and long-term disability and vision insurance.
• Compare affordable plans — Paychex Agency represents leading national and regional insurers in every state. We can match features and availability to your clients’ needs.
• Have a worry-free startup — Paychex helps inform and enroll your clients’ employees, communicate with insurance carriers and calculate and initiate payroll deductions once the coverage has been placed and bound.

Paychex Agency, Inc. provides complete administration of employee benefits based on the reported payroll data. Please visit www.paychex.com for more information. California D/B/A, Paychex Insurance Agency, Inc., License #OC 2807