As companies across the nation are working to reduce health care costs, another great way to trim excessive rates is to educate your employees about using the group health insurance benefits.

Here are six reasons your employees should understand the group coverage:

1. They’ll be able to pick a plan to fit their health care utilization patterns. Consumers may pick a Health Maintenance Organization (HMO) because it is the cheapest option but they may want to visit out-of-network providers and would get more use from a Preferred Provider Organization (PPO).
2. Cost differences between visiting in-network and out-of-network health care providers vary greatly. In-network providers are more affordable and employees will spend more to see out-of-network providers if out-of-network visits are covered at all.
3. The type of emergencies that constitute emergency room visits. Unnecessary visits to the ER are expensive, teaching employees when they should visit an ER versus going to a medical clinic or the doctor could help save costs in the long term.
4. The cost variations in copayments for brand name versus generic medications. Generic medications are much more affordable than brand name.
5. Employees may take advantage of wellness programs or gym membership discounts. Smoking cessation, disease control, or weight loss programs can help employees lead healthier lives or kick bad habits, this will save money in the long run.
6. They will add dependents to the health insurance plan. Inform employees how much it costs to add dependents or a spouse to the group plan.

For many small businesses, finding a group health insurance policy that is affordable can be a tough situation. Entrepreneurs should consider their own health insurance costs and those of future employees.

Why is group health insurance expensive for small businesses?

The cost of small business health insurance is dependent on a number of factors including:

• Overall size of the company. The smaller the company, typically, the more health insurance costs will be due to the fact that the risk is spread over a small number of people. Large companies have better rates because there are more insured individuals, spreading the risk.
• General health of the company. As more individuals make claims, the health insurance rates will increase.
• Average age of the company. Young adults are more affordable to insure than older adults because they use health care services less often.

There are different options for entrepreneurs who want to provide their employees access to health insurance.

Here are some alternative options:

• Find individual plans. Compare group health rates with individual health insurance coverage on the private market. GoHealth Workplace is one program employers can use to make it easy for individuals to find health insurance.
• Offer to subsidize individual coverage. For employees that are buying individual plans, offer to pay a portion of the monthly premium.
• Utilize high deductible plans. High deductible plans have low monthly premiums but leave employees picking up more of the cost. While this may not be the best option for all employees, it will help business owners save money. These plans can also be combined with a Health Savings Account (HSA) to accumulate funds for health care services and business owners can contribute funds to these accounts for employees.
• Avoid mini-med plans. This type of policy provides employees with restricted coverage which could leave them with a lot of out-of-pocket costs and these plans will be completely phased out by 2014. The government is allowing only select employers to continue offering these plans currently.
• Pick health insurance plans with limited networks. Health insurers can negotiate rates with select health care providers in an area to cut costs. A plan with a limited network will help cut the cost of monthly premiums but could be a hassle if the entrepreneur or employees travel frequently. This could also be a problem for employees that commute far to work.

It is always exciting to start a new chapter in your life and move to a different city. However, in the melee of packing up and saying your goodbyes, it’s important not to forget your health insurance.

Even if you aren’t leaving your current company, your health insurance options and the cost of your health care could change. Planning ahead and getting educated on what to expect will go a long way in helping to prevent sticker shock when you need to go the doctor in your new city.

If you are moving to a new job, make sure that you talk to the human resources department to learn about your health insurance policy before moving. Don’t be afraid to ask questions and make sure that your most pressing costs (such as your medication) are covered under any policy changes.

Moving but staying with the same company? Find out if there are any changes in the group policy and you should also consider the fact that health insurance costs differ from city to city. For example, if you are moving from a state with cheap coverage (like Alabama) to a state with very expensive coverage (like Massachusetts), you should be prepared for your health care costs to increase.

Another thing to consider is that your network will change. If you have a Health Maintenance Organization (HMO) and have to use a physician within a specific network, your new city might not have as many options and you may have a harder time finding a good fit for you and your family. Talk to the human resources department in your new city or ask your coworkers to give you tips on doctors they know and trust.

As health insurance companies start to become more consumer focused, many are trying new benefits and products to entice consumers. A new trend among health insurers is a benefit called a deductible credit.

A deductible credit varies between insurers that offer them but mainly the credit benefits anyone who doesn’t typically meet a deductible and for those with really high deductibles.

It works like this:

Abby has a health insurance plan with a $10,000 deductible and she didn’t reach the $10,000 in 2011 – yikes, that’s a lot money out-of-pocket! Since her plan has a deductible credit of 20 percent, her deductible in 2012 will be $8,000 since she didn’t hit her deductible in 2011. Then, if she doesn’t meet her deductible in 2012, her deductible will be another 20 percent lower in 2013.

Many consumers and employers are moving to plans with higher deductibles to save on monthly costs. While this lowers premiums – it increases out-of-pocket spend and many consumers have been postponing care to save on those costs.

Pros of deductible credits:

• A deductible credit will help make the deductible more affordable over the years.
• It’s similar to a safe-driver discount that auto insurers provide consumers.
• Create more active health consumers who pay attention to their deductible and costs for health care services.

Cons of deductible credits:

• It could influence consumers to delay a health care service to avoid the deductible and get a discount the following year.
• More people may switch to really high deductibles for this benefit.

There are many benefits to group health insurance plans but they aren’t always the best option.

Sure, the employer picks up part of the tab but employers are also passing more of the cost to employees than ever before.

Here are a couple examples of when a group plan may not be the best option:

• The group plan is considered a mini-med health plan. Mini-med plans are typically offered by restaurants and to part-time workers but there are a lot of exclusions in the plan and they will only coverage a percentage of health costs.
• Deductibles on high deductible plans continue to get more expensive. At some point, certain deductibles are no longer affordable to consumers depending on their budget. For the really high deductible plans, consumers should either open a Health Savings Account (HSA) or find an individual health insurance plan.
• Costs for dependents and the spouse continue to increase. Some companies are increasing the employee’s share of costs for dependents or a spouse to save money. In this case, spouses should either stay on separate plans or consider an individual plan instead of adding a dependent.
• Maternity coverage is not provided and it’s a wanted benefit. If a couple wants to start a family but the group plan doesn’t provide maternity coverage, they should look to get a rider from the health insurance company or purchase an individual plan.

Consumers should also be aware of additions to employer health plans. Many companies offer Flexible Spending Accounts (FSAs) which are a nice benefit and addition to a health insurance plan but they also have a lot more limitations when compared to an HSA.

In 2006, Massachusetts was the first state to initiate a health insurance mandate which required individuals to purchase insurance. Sadly, although the plan was intended to make insurance available and affordable to all, it increased spending across the state.

To battle these increased costs, many representatives and health insurance companies are working hard to initiate new programs and to lower costs for consumers.

One such idea is the move to ‘global payment’ plans. With global payment plans, networks such as BlueCross Blue Shield receive a flat yearly fee to cover their insured clients, regardless of the actual cost for each patient.

Part of the idea behind the global payment plan is that physicians will be cautious when ordering expensive and potentially unnecessary testing. Financial incentives are in place to help ensure that patients continue to receive the highest quality of care. Patients are more empowered to manage their own health care and they are free to seek medical professionals of their choice.

Although it is still early in the global payment plan, the initial success is encouraging. In fact, The Children’s Hospital of Massachusetts predicts that it will save $83 million in just the next two years. The savings will benefit patients and physicians alike, and if the plan continues to well, global payment plans could be adopted across the country.

By continuing to brainstorm new ideas and implement reform plans, we can find a way to fix the health insurance issue in this country and still receive amazing health care from talented and devoted professionals.