Healthcare Basics for ASI Members

Types of Health Insurance Programs Available to the Small Employer

• Preferred Provider Organization (PPO)
  Health insurance providers offer their services at lower rate due to arrangement with and insurance company or managed care network.

• Health Maintenance Organization (HMO)
  
  
  1. Emphasizes preventive care, early care, and treatment on an outpatient basis
  2. Provides broad range of services for a fixed prepaid payment
  3. Insured must select a primary care physician
     
     
• Alternative Approaches to funding health insurance costs for small firms and individuals. This approach is two-fold:
  
  
  1. High Deductible Health Plan (HDHP)
     Categorized into one of two types:
     
     
     1. Individual -  covers one person
        • Minimum deductible   $1,000
        • Maximum annual out-of-pocket   $5,000
          
          
     2. Family - covers more than one family member
        • Minimum deductible   $2,000
        • Maximum annual out-of-pocket   $10,000

     When deductible is met, the HDHP pays eligible benefits
     Deductibles and annual out-of-pocket are subject to an annual cost of living adjustment

  2. Health Savings Account (HSA) to fund out-of-pocket expenses or other qualified medical expenses
     Federal tax exempt savings account set up at a financial institution to fund out-of-pocket expenses or qualified medical expenses
     
     
     1. Subject to pre-tax deductible
        
     2. Earn tax favored interest
        
     3. HSA funds withdrawn are taxable at the account holder’s current tax rate

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