English 420, Business Writing

My goal this week was to look into Humana’s insurance plans, such as HMO, PPO, and a flexible spending account or other consumer-driven plans. We are assuming that Knight Corporation already has Humana’s HMO and they are paying 100%. Also, we are assuming that they pay $3000-4000 per single person and $6000-7000 per family of 4.

The first option we are thinking about proposing is to have the employee pay 20% of the current premiums. If assuming that 30% of the employees are single, and 70% are families, then this would save the company over $204,000. Also, it would mean that the single employees and family employees pay $600-800 and $1200-1400, respectively. I kept this in mind when comparing the other plans that Humana offers.
HMO PROS:
1. Don’t have to worry about pre-existing conditions
2. Employees will keep their current physicians
3. Employees are used to this plan and are satisfied
4. Low out of pocket costs: plan pays 100% most of the time and copayments are $10-25 for a doctor’s visit and $20-50 for a specialists
5. Employees are going to keep same benefits
HMO CONS:
1. Have to be referred to a specialist
2. Doesn’t offer a spending account

Next, I compared Humana’s PPO. PPO’s are Humana’s top insurance plan for employers. However, I was unable to find specific quotes because the site does not allow me to register my fictional company.
PPO PROS:
1. Employees can see doctors outside Humana’s network
2. Don’t need any kind of referral to a specialist
3. The co-pays are typically the same as above for the HMO
4. Some of Humana’s plan offer a FSA option
PPO CONS:
1. You have to pay more to see a doctor out of the network
2. This plan usually has a deductible associated with it: $250-5,000 per person and $500-10,000 per family.
The deductible for this plan shows a pretty substantial range in price, and without a specific quote, we would have to assume that it could be anywhere in this range. Given this, it would be cheaper for the employee to pay 20% of their current plan and keep the same benefits.

Finally, I looked into Humana’s FSA. They are offered with any of Humana’s consumer-driven plans. The employer sets a minimum and maximum amount that can be put into the account, and anything left over at the end of the year is lost. Also, the employee can’t take the money in the account if they leave Knight Corporation. Another option for a savings account is the Health Savings Account. The upside of this type of plan is that the money in the account uses pre-tax dollars and also builds interest over time. It does not expire at the end of the year and the employee can take the money with them to another job. The downside is that the employee must be enrolled in a high deductible plan. Knight wants to take care of their employees and have a good reputation. With their aging workforce, the high deductibles may be too much of an impact on their healthcare costs. Keeping this in mind, I don’t think we should offer a health savings account with a high deductible plan. Also, I’m not sure the FSA would be a good option both because the cost of chemotherapy is very high, and employees would not have the ability to put that much money into their accounts in a short period of time. I think the three best options to propose are as follows:
1. Stay with the current plan and split cost 80/20
2. Stay with an HMO and switch carriers in hopes they will be cheaper
3. Switch to a PPO

The following links compare Humana’s plans:
http://www.humana.com/employers/tools/pop_compare_plans.asp
http://www.humana.com/employers/plans/group/fsa.asp