Benefi ts 293of Labor, the Internal Revenue Service, and the Pension Benefi t Guaranty
Corporation.Health Insurance
Health insurance is the most frequently provided benefi t and the benefi t that
receives the most attention. The number of people without health insurance
rose to 46 million in 2007 (DeNavas - Walt, Proctor, & Smith, 2008).
Health insurance is offered by all state governments and by
99.5 percent of local governments, but by only 62 percent of all organizations
nationally (Reddick & Coggburn, 2007). Given that the costs of health
insurance rose more than twice the rate of employees ’ wages and overall
infl ation in 2006, most managed care plans have been designed to focus on
controlling costs. The most common are health maintenance organizations
(HMO), preferred provider organizations (PPO), point of service (POS),
and high - deductible health plans (HDHP). Each type of plan has advan-
tages and disadvantages. With an HMO plan, employees must receive
their health care from an HMO physician. If they do, their expenses
are typically covered in full. With a PPO plan, employees have lower
deductibles and coinsurance if they use physicians or hospitals in the pre-
ferred provider network. With a POS plan, employees are reimbursed at
a lower rate for services received outside the network; they also have a
primary care physician who must approve visits to specialists and hospitals.
An HDHP plan typically has a single deductible of at least one thousand
dollars and a family deductible of at least two thousand dollars annually
(Reddick & Coggburn, 2007). Some employers offer health saving accounts,
which allow employees to have a savings or investment account for money put
aside to cover health care costs. The money is excluded from taxable income.
If the money is withdrawn and used for health expenses, it is never taxed.
The types of health insurance programs and the amounts that employ-
ees and employers contribute to the plans vary. Keeping track of them and
fi guring out the best plan takes some research and asking questions.
The Consolidated Omnibus Budget Reconciliation Act of 1986
(COBRA) was enacted to provide employees with the opportunity to
temporarily continue receiving their employer - sponsored medical care
insurance under the employer ’ s plan if their coverage otherwise would
cease due to termination, layoff, or other changes in the employment status.
COBRA covers employers of twenty or more employees, except for the
federal government and religious organizations. Many states have their
own versions of COBRA to cover small employers. COBRA enables