Health Insurance vs. PHSPs
Private Health Services Plans Versus Group Health Insurance Plans
Are cost plus and have no monthly premiums:
- The business sets a predetermined limit in the Private Health Services Plan for an amount that employees can spend under the PHSP.
- If the employees do not use their limit then the business owner saves this money.
- The Coast Mountain Benefits 10% administration fee is less than fees, costs, profit, and risk premiums charged by insurance company group plans.
- We have no maintenance or annual renewal fees.
Group Health Plans...
Charge monthly premiums to businesses. The premium calculation is complicated, but generally takes into account the following:
- Sales fees paid to the broker (generally about 10%)
- Insurance company administration costs
- Insurance company profit
- The risk associated with the plan
- The risk portion of the premium is based on actuarial valuations that take into account the level of coverage, number of people in the plan, and the experience rating of the plan. Put another way...
- The more comprehensive the group plan coverage the higher the monthly premium
- The more people in the plan the lower the premium
- The more the plan is used by employees, the greater the effect on the experience rating and the higher the premium
Group Medical Plans
- Are evaluated on the plan anniversary by the insurance company in order to determine if the premium should decrease, stay the same, or increase
- Set limits on certain coverage's.
- For example a group plan may limit vision care coverage to $200 per year, or orthodontics to 50%
Private Health Services Plans
- Allow business owners complete control over future health care costs,
- Employee limits of the PHSP will only change if the business owner wishes to change them
- Have no specific caps on different coverages,
- Employees have complete control on how they spend their limit
- Some may wish to spend a limit on dental while others prescriptions and vision care etc.
- Can be used to enhance group health plan coverage,
- If your existing group health plan does not have dental care then employees can use their PHSP limit for dental
- PHSP can be applied to any amounts that are capped or excluded in the group plan
- Such as vision care or orthotics etc.