Managed Care Introduction -- Managed Care Types -- Advantages and Disadvantages -- How to Choose the Right Plan
Challenges Concerning Medical Benefits -- Relationships to Employee Benefit Wheel -- Web Links Page -- Works Cited
Managed Care Introduction
With the ever-increasing costs of providing medical coverage, are medical benefits for employees really worth the high prices inflicted on employers? Yes! The answer is yes!!!
According to the Integra Group, who provides financial and operational accounting consulting services to all forms of business, for every one dollar invested by the employer in an employee’s well being provides a ten dollar return on that investment (FisherVista). Before an examination of medical benefits and managed care plans can be presented, it is imperative to understand what is meant by medical benefits and managed care. Medical benefits are defined as: a payment made or an entitlement available in accordance with a wage agreement, insurance policy, or public assistance program, relating to health/medical care. Managed care, on the other hand, is a type of medical benefit. It is any system of delivering health services in which care is delivered by a specified network of doctors and hospitals that agree to comply with the care approaches established by a care-management process. Providers receive a capitated payment for providing all medically necessary care to enrollees or may be paid on a fee-for-service basis (State of California). Managed care often involves a defined delivery system of providers with some form of contractual arrangement with a health plan. Capitation is the method of payment used in managed care in which doctors or hospitals are paid a fixed amount for each person cared for, regardless of the actual number or type of services they deliver (State of California).
Employer provided medical benefits are a very important part of compensation in today’s highly competitive workforce. There are many reasons to provide medical benefits; however, the number one reason is to attract and retain competent employees, without which businesses would not survive. Surveys show that medical benefits are highly demanded by all employees. Currently, medical benefits are considered a norm as part of a basic compensation plan. In addition, each year, employees are demanding greater and greater coverage from their medical plans (Benefit News). In order to attract employees and keep them away from the competition, employers must offer a basic, if not extensive, medical benefit package. Another reason to offer medical benefits is to show concern for the employee’s welfare, an added way of attracting and retaining competent employees. If an existing or potential employee believes that the company cares about him/her, then the employee may be more inclined to stay with or join that company. When medical packages are joined by other benefits as part of a total compensation strategy, the company looks that much more appealing to both prospective employees and current ones.
Another reason to provide medical benefits is the favorable tax treatment to both the employer and the employee. Medical costs are deducted pre-tax in both instances. This means that both the employer’s and employee’s tax brackets may be lowered; thus resulting in less federal, state, and local taxes owed. An additional reason to provide medical coverage exists; it is the possibility that medical benefits will be a mandated program in the near future. The legal requirement known as Senate Bill 2 or SB2 is one of many legislative reforms that California is working on as a social measure to fix the health care problems—high costs of coverage, no regulation on cost increases, excessively high profits for insurance providers, too many Californians without insurance, etc. These legal issues will be discussed later in greater detail.
As shown medical benefits are a necessary part in all compensation packages. The types of medical benefits and/or managed care plans available include: Health Maintenance Organizations (HMOs), Preferred Provider Plans (PPOs), Point of Service Plans (POSs), Medical Savings Accounts (MSAs), dental plans, and vision packages. Also provided will be a rundown of the pros and cons of each type of plan, and the methods of choosing the right plan to meet individual company needs. After the basics are covered, it is essential to look at the looming problems, specifically the obscene increases in benefit costs over the past few years, faced by employers and employees and the potential implications and solutions.