Comparing Cost Control Strategies
Employer sponsored medical insurance provides employees coverage under group health plans. Group health plans are managed by the Human Resources department. Employers are able to create a benefits package that can be cost effective and offers reduced costs to employees. There are some benefits that can be omitted an example could be a prescription plan. A specific set of network providers can be established for certain coverage such as mental health. In some cases a benefits specialist can oversee coverage like the prescription drug benefit to find ways to further reduce costs for the employer and employees. Larger employers could opt to use a self-funded health plan. In this case, an employer covers the costs of employee medical benefits to avoid buying an insurance plan from other companies. A self-insured health plan does not pay a premium to a managed care organization or insurance carrier. The funds are set aside to pay benefits, assuming the risks of paying medical expenses directly, for any medical services provided as outlined by the employer. Riders or options are additional coverages such as vision and dental. There are other riders considered complementary health care which can include chiropractic, acupuncture, and massage therapy to name a few. Employees are eligible to sign up for benefits or change existing benefits during the employer’s enrollment period. This is typically offered once a year. During enrollment, the employer provides updates or changes to the plan to give employees a chance to review and make changes based on their individual medical needs. Provider networks or PPO’s are commonly used by self-funded health plans. The provider network can offer several options to employees to take advantage of discounts negotiated by the employer. This is known as network sharing. Third party administrators are usually hired by self-funded plans to be...
References: Valerius, J., Bayes, N., Newby, C., & Blochowiak, J. (2014). Medical Insurance: An Integrated Claims Process Approach (6th ed.). Boston, MA: McGraw-Hill.
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