Key Concepts to Understand - Health Insurance Simplified

Summary

Health Insurance Simplified Podcast Episode Summary

Episode Title: Key Concepts to Understand – Health Insurance Simplified
Date: June 25, 2021
Host: Allen Helgeson (Sanford Health Plan)
Guests: Holly (Sanford Health Plan), Perry (Purnell Insurance Agency)

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Episode Overview

This episode of "Health Insurance Simplified" aims to demystify the core concepts and jargon surrounding group and individual health insurance plans. The discussion centers on helping employers—especially small business owners—understand the key differences, tax implications, and plan types (HMO, PPO, HSA-eligible), making it easier to select the best coverage for their teams and themselves. The hosts strive to remove confusion, offer practical insights, and highlight why proper health coverage matters for businesses, employees, and communities.

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Key Discussion Points & Insights

1. Group vs. Individual Health Insurance

• Definition & Eligibility
  • Perry: “Group health plans are sponsored and offered by the employer. You have to have a legitimate employee relationship… IRS rules and regulations on who can offer a group health plan.” (00:32)
  • Individual plans are for those not in an employer group—purchased directly with carriers or via the insurance marketplace (healthcare.gov).
  • Alan: “There are two ways to buy individual health insurance in South Dakota: directly or through the marketplace. The marketplace helps connect people to help pay for that coverage.” (01:33)
• Who Chooses the Plan?
  • Perry: “With group coverage, your employer is making that decision for you... On the individual side...you have to go through and decide which plan is best for you.” (01:49)
• Role of Agents
  • Agents are especially valuable in helping navigate the complexities of both options—plan structures, premiums, eligibility, and more. (02:06)
• Tax Advantages
  • Group plans come with tax perks for both employers and employees (pre-tax deductions for employees; tax deductions for employers). (02:06)

2. Mandates & Practical Value for Small Employers

• Obligations:
  • Holly: “Employers who have more than 50 employees...are required to offer health insurance per the Affordable Care Act. Under 50, which is the market we’re talking with today, you aren’t required.” (02:34)
• Competitive Advantage:
  • Offering benefits remains a best practice for retention and recruitment, even when not legally required. (02:59)

3. Impact on Communities

• Broader Benefits:
  • Alan: “Offering benefits...provides good value for the community... Employees have protection, can seek care when needed, and get back to work faster.” (02:59)

4. Plan Types Explained: HMO vs. PPO

• HMO (Health Maintenance Organization):
  • Perry: “...when you think of an hmo, you should think that you don’t have insurance outside of that hmo.” (03:38)
  • Holly: “At hmo, we have direct contracts with providers. If you go outside that network, you wouldn’t have coverage.” (03:54)
• PPO (Preferred Provider Organization):
  • Alan: “With a PPO, you can go where you want, but you’re going to get the best deal with somebody who’s signed the contract.” (04:04)
  • Holly: Coverage exists outside the PPO network but is less generous; the preferred network offers the most value. (04:31)
  • Key Distinction: PPOs offer more flexibility, but network providers maximize savings.

5. HSA-Eligible Plans & Accounts

• Terminology & Criteria:
  • Perry: “An HSA eligible plan is a high deductible health plan...that meets criteria the government sets...no first-dollar coverage for office visits or prescriptions.” (04:51)
• Contribution & Usage:
  • HSAs allow pre-tax saving for health expenses, separate from insurance; can be set up at most banks.
  • Perry: “You can use that money for anything health related for any member of your household... I just got hearing aids, not covered by insurance, but used my HSA—tax free.” (06:57)
• Plan Structure & Confusion:
  • Holly: “High deductible health plan is your health insurance...HSA money helps pay the deductible...My husband thinks the HSA is our insurance, but it’s the bank account that helps pay what insurance doesn’t.” (07:19)
  • Not all high deductible plans are HSA-eligible; IRS sets annual criteria.
  • Alan: “When you’re looking through the description of the plans, they’ll note that this plan is HSA qualified.” (08:09)
• Tax Advantages & Employer Value:
  • Strongly recommended due to tax incentives for both employees and employers.
  • Holly: “Our agents...can help you define what qualifies for an HSA-eligible plan...a $7,000 deductible doesn’t mean it qualifies.” (09:02)
• Employer Contributions:
  • Employers may contribute to HSAs, adding value and retention benefits. (10:21)
• Encouraging Cost-Consciousness:
  • High deductible plans with HSAs promote better stewardship and decision-making among employees regarding health expenses. (10:31)

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Notable Quotes & Memorable Moments

• On Plan Selection:
  • “One of the advantages to offering employer benefits...is the tax advantages. So there are tax advantages for tax deductions for the employer, the pre-tax benefit for the employee that they wouldn’t get otherwise outside an individual market.” — Alan (02:06)
• On HSAs:
  • “Any banking institution...offers them. In order to have one, you have to have the right kind of health insurance. IRS sets rules on how much you can contribute... It’s a tax incentive to set aside money for your healthcare rainy day.” — Perry (05:58)
  • "My husband...thinks the HSA is our insurance and it's not. We use our HSA money to pay that deductible." — Holly (07:41)
• Tax Incentives for Small Employers:
  • “Our agents at Sanford Health Plan...help you define if a plan qualifies for an HSA. Strongly suggest working with an agent if you’re considering high deductible health plans...” — Holly (09:02)
• Behavioral Impact:
  • “People make better decisions when it’s their dollars first. Back in the day, if you had a prepaid health plan, they were abused. So...it also encourages personal responsibility.” — Alan (10:31)

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Key Timestamps

• 00:32 — Defining group vs. individual health insurance (Perry & Alan)
• 01:33 — Individual coverage & using the health insurance marketplace (Alan)
• 02:34 — Regulatory requirements for employers (Holly)
• 02:59 — Broader community and employee advantages of employer-sponsored benefits (Alan)
• 03:38 — Understanding HMO networks (Perry)
• 04:04 — PPOs, flexibility, and network savings (Alan)
• 04:51 – 06:57 — HSAs, high deductible plan requirements, and practical scenarios (Perry)
• 07:19 – 08:09 — Distinction between health insurance and HSA bank accounts (Holly & Alan)
• 09:02 — The importance of consulting an agent for HSA-eligibility (Holly)
• 10:21 — Employer HSA contributions and the logic of consumer responsibility (Alan)

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Tone & Style

The conversation is approachable, practical, and focused on clearing up common confusions in health insurance—especially for small employers. The hosts provide plain-language definitions, real-world examples, and emphasize the value of consultative support from an agent.

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For more resources, visit sanfordhealthplan.com/employers.
Contact Sanford Health Plan at 877-305-5463 (M-F, 8am-5pm Central Time).

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This summary covers all major topics, provides practical takeaways, and captures the conversational style of the speakers while ensuring newcomers to health insurance can confidently approach their employer or personal coverage options.

Transcript

[A]

With all of the healthcare industry jargon out there, it's no wonder that purchasing health insurance for your employees can be confusing and it can feel a bit overwhelming. Our listeners are in luck, however, since we're here to take the confusion out of the process and help you understand the key terms. Making sure your health insurance offering is a good fit for your business and your employees can make a huge difference at the bottom line. So this is vital information. Hi, I'm Allen Helgeson and this is Health Insurance Simplified. Joining me today are Holly from Sanford Health Plan and Perry from Purnell Insurance Agency. All right, let's start off right off the bat, all these different terms. There are so many things out there. Perry, let's start with you. What's the difference between group health insurance and individual health insurance? That's a good question, Alan. We get asked that all the time. Group health plans are health plans that are sponsored and offered by the employer. You have to have a legitimate employee relationship in order to offer those plans. So there's IRS rules and regulations on who can offer a group health plan. Individual plans are plans that are purchased individually or outside of a group health plan. So non group and individual or individuals. Non group, I think is a better way to put it. So they don't have an employer relationship. They're an individual purchasing health insurance on their own.

[B]

So an individual coverage is going to be something that you purchase direct, either through an agent direct with the health insurance company or healthcare.gov I always tell

[A]

people there's two ways to buy individual health insurance in South Dakota, directly or through the marketplace. What the marketplace is going to do best is help connect people to help to help pay for that coverage. Where an employer otherwise would be helping that individual pay for that coverage.

[B]

Right. And with group coverage, your employer is making that decision for you, deciding what plans to offer on the individual side. If you're buying direct and on your own, you're making that choice. You have to go through and decide which plan is best for you.

[A]

Which plan, which benefit structure, which premium can I afford? What am I eligible for? There's a lot to it. That's where an agent becomes extremely valuable in helping people walk through that process. One of the advantages to offering employer benefits for employees is the tax advantages. So there are tax advantages for tax deductions for the employer, the pre tax benefit for the employee that they wouldn't get otherwise outside an individual market.

[B]

Just to make a point, employers who have more than 50 employees, they are required to offer health insurance per the affordable Care Act. But those employers who are under 50, which is the market we're talking with today, you aren't required to offer insurance per the Affordable Care Act. But there are so many advantages. Retaining employees, recruiting new employees, just making sure you're taking care of your employees

[A]

and offering benefits to the employee provides good value to the community or a good stewardship over all over the community that our employers, employees, excuse me, are responsible, they have protection that they can seek care when they need it. They can get back to work faster if they do have an experience. Health insurance benefits provide a broader benefit for the communities. Perry, let's talk about abbreviations. When I start researching group health insurance, it looks like Alphabet soup out there. How can employers know what kind of group health insurance is right for their business? For example, what's an hmo? The HMO stands for health Maintenance organization. And they used to stand for a lot of other things. And I think here, locally, when we think about an hmo, we have a network contracted. And basically when you think of an hmo, you should think that you don't have insurance outside of that hmo. Yeah.

[B]

So at hmo, we have direct contracts with providers, and if you go outside of that network, then you wouldn't have coverage with your health insurance.

[A]

How about a ppo? What's a ppo? A PPO is a preferred provider organization. I think when I'm explaining PPOs to people in my office, I typically will tell them that you can go where you want with a ppo, but you're going to get the best deal with somebody who signed the contract. And so you want to take advantage of that network. You're more free with a PPO to move about and stay within the network and get the best deals with providers

[B]

who have contracting, just like what the PPO stands for, Preferred Provider Organization. So again, we still have contracts with these providers at Sanford Health Plan, but it's a little bit broader. So if you go somewhere that doesn't have a contract, there's still some coverage. It's just not as good as if you were with one of our preferred providers.

[A]

Agreed. All right, let's talk about this one. I know has lots of confusion tied to it. What is an HSA eligible plan? There's a lot of confusion around it. HSAs for a lot of reasons. Long time. For a long time, the industry used the wrong terminology. And so today we are using an HSA eligible plan. An HSA eligible plan is a high deductible health plan. So it meets criteria that the government sets For a high deductible health plan, there's no first dollar coverage for office visits for prescription drugs. So generally speaking they're easy to describe because I'll tell somebody that you have all the costs for services up to a certain amount. A lot of times it's nice if that deductible is a max out of pocket. So deductible and max out of pocket can be the same number in certain circumstances, certain product. The $6,900 HSA qualified plan from Sanford is a great example. It's just easy to explain. It's all you to 6900 Allen and then you're covered 100%. Because you have the right kind of health insurance, you're allowed to set aside money in a health savings account. A health savings account is separate and independent of your health insurance. Any banking institution or lots of banking institutions offer them. You can go online to find a health savings account. But if you walk into a local bank and ask for a health savings account, in order to have one, you have to have the right kind of health insur. They should ask that question. They may or may not. The IRS sets rules for how much we can contribute to a health savings account and every year that number changes. So I always describe high deductible health plans or HSA eligible plans as a tax incentive to set aside money for your healthcare rainy day. And it's a great place to accumulate. It's a great plan for people who generally don't use much healthcare and they have the tax advantages set aside money for that healthcare rainy day. They, as they accumulate money in their health savings account, I think is a strategy that they can take higher deductibles. They can take on more risk because they have the tax incentive to self insure for a portion of that. They can use that money for anything health related for any member of their household. So I, for example, just got hearing aids not covered by health insurance, but I had the money in my health savings account. So I have tax free money to use for my hearing aids. It's a terrific benefit. And so I'm a huge fan of high deductible health plans and the HSA combination.

[B]

Yeah. So I think when we're talking high deductible health plans and hsa, people get the most confused because really they're, they're one and the same, but they're not. So high deductible health plans is your health insurance. That's what you're going to use at the doctor's office to get your care, go to the hospital for your MRIs, those types of things. And your HSA money is what's going to help pay for that deductible. So I think that's where the confusion comes in because everybody's like, well, I have an hsa, you know, that's my health insurance. But that's your bank account that helps pay for what your health insurance doesn't pay for. So I have that struggle in my house with my husband. He doesn't quite understand how that works. He thinks the HSA is our insurance and it's not. So we have our high deductible health plan where we pay everything until our deductible is met. We use our HSA money to pay that deductible.

[A]

Absolutely. Great distinction, because not all high deductible health plans are HSA qualified health plans. And so the health plans generally will define that. And when you're looking through the description of the plans, they'll note that this plan is HSA qualified. So you can open and have and contribute to an hsa. And people ask me all the time, do I have to have the hsa? And you don't, you don't. It's completely optional for you, but I would highly recommend it. It's a great tax advantage tool for the future for your health care. And when somebody comes to me and to talk about Medicare and they've got a lot of money in their HSA because they've done this right over the years, they have more options and have more flexibility when it comes to looking at products at that time. That's a whole nother podcast right there, I'm sure. Big fan of HSAs myself and high deductible health plans.

[B]

One other thing I do also want to mention is, you know, we're saying high deductible health plan. Well, in today's world, that can be every plan, right? A lot of plans have higher deductibles. So if you know the insurance industry from even 10, 15 years ago, deductibles were like $250 at your employer. Up to $1,000 was a lot. Well, now with insurance, you have a 5,000 or a $7,000 deductible. Even though those are high deductibles, they're not a high deductible health plan defined by the irs. So that is where our agents, that Stanford Health Plan has contracted. They're a great value because they can help you define, okay, this is what qualifies for an HSA eligible plan. Because of how the government defines high deductible health plan, HSA eligible versus oh, it's a $7,000 deductible. It should be, it should qualify and it doesn't. So I would strongly suggest working with an agent if you're considering, well, any health insurance as a small employer, but especially if you are interested in those high deductible health plans that have the HSA eligible. Because as an employer there are so many tax advantages to offering those.

[A]

The employer can even contribute to the employee's health savings account if they like. And that can be an extra benefit when we're looking to attract and retrain employees as well. So a lot of times too, if an employer has enough employees, they can offer multiple plans from Sanford. And I always encourage them to consider putting a health savings account qualified type of plan as one of those options that I always encourage that, that we bring it to the table because of the tax advantages and how it encourages that self insuring and good stewardship of dollars too. People make better decisions when it's their dollars first. So back in the day, if you had a prepaid health plan, why we don't have them anymore is because they're abused. So if you have zero incentive not to go to the doctor, you're gonna go to the doctor all the time. And so we have to take some of that aspect away too. So it does also encourage personal responsibility. Holly and Perry, thanks for taking some of the confusion out of those types of networks and differences that are important when it comes to choosing the right plans for your employees. To learn more about the options through Sanford health plan, visit sanfordhealthplan.com employers. You can also call 877-3055-463. Monday through Friday, 8am to 5pm Central Time. This info is also in the show Notes for this episode. For Health Insurance Simplified, I'm Alan Helgeson.