- August 18, 2022
- Posted by: adam
- Category: Employee Benefits, HR Strategy
As an employer, if you’re shopping around for the best health insurance plan for your employees and wondering, “what exactly is insurance? And why is it important?” you are not alone. Insurance can be confusing—you may wonder how it works, the benefits of insurance, and how you can find the best plan and benefits for your employees.
Let’s dive in.
What is health insurance?
Simply put, health insurance is a safety net that helps your employees and their loved ones stay healthy with preventative care and medications, as well as help them recover after something like an illness or an accident. When your employees experience something covered by their insurance, and they file a claim, the insurance pays the provider based on the terms of the policy.
You want employees to feel protected and to be proactive about their health. Not doing so can lead to greater health risks long-term and cost them financial security. Insurance protects them from this risk. You hope your employees spend more time using their insurance for preventative care than catastrophic care, but if they have no insurance, either scenario will put them in a difficult financial situation.
How does insurance work?
Insurance is, essentially, a “rainy day fund” that is shared by your employees and managed by what is called an insurance carrier. The insurance carrier uses the money collected, called a premium, to help fulfill its promise to your employees when a claim is filed. Insurance also has a policy limit, the maximum amount the carrier will pay under the policy, and a deductible, the amount your employees must pay themselves, out of pocket, before the carrier pays a claim.
What are the benefits of insurance?
Having insurance allows your employees to manage life events that inevitably come up. Insurance helps keep your employees’ lives on track as much as possible after something happens. Insurance also:
- Helps your employees live their lives with fewer worries. Employees know they’ll receive financial assistance after an accident and have support to recover, and it provides protection for when the worst happens.
- Increases employee retention rates. When you offer health insurance to your current employees, it shows that you care about their wellbeing—and when you offer it to potential employees, you widen your pool of candidates.
- Helps maintain your employees’ current standard of living. If they become disabled or have a critical illness, insurance can cover their day-to-day costs and other expenses while they focus on their health and recovery.
- Helps give your employees peace of mind. A study shows that when needed health care, such as medications, increased in price by ten dollars, people stopped buying those medications. Life happens, and your employees cannot anticipate what might come up.
How do I choose an insurance advisor?
Consider the following when choosing an insurance agency and advisor to help secure coverage for your employees:
- Type of coverage. What kind of insurance does the agency offer? Can they advise and educate on a spectrum of policies such as fully insured, level-funded, or self-funded? Do they offer additional insurance options such as life insurance or ancillary benefits? The more you know, the better position you’ll be in to make educated decisions for your business and your employees.
- Education and resources. What resources does the agency offer to help you manage your insurance and benefits program? Do they proactively share information and materials? Do they make resources readily available?
- Customer service. Do others recommend this agency? What do others say about them? Look them up online to see Google reviews, explore testimonials and case studies on their website, and review their LinkedIn profiles.
Taking the time to research a company before engaging in a sales conversation is common for buyers today. But be sure you are also making time in your process to spend quality time getting to know your future advisor.
Great insurance agencies and advisors will take the time to educate you about different options. Get a sense of how capable they are at informing and educating, so you can feel confident and informed about a potentially unfamiliar topic. Make your advisor selection based on building a relationship with someone who will work collaboratively to help you make the best decisions for your business.
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