If you own a business, you may be struggling with picking the right health care plan for your company. With an alphabet soup of acronyms and confusing references to networks, coinsurance and deductibles, many employers are lost when it comes to health care options. Understanding the key terms in the health insurance world is the first step in picking the right insurance. A benefits consulting firm can then assist you in making the best choice for your organization’s needs.
For many employers, the premium, or monthly fee, is the most important consideration in selecting a health insurance plan. But other factors affect the overall value of the insurance. This includes the deductible, the amount that the insured must pay out of pocket before the insurance takes over, and the coinsurance or copay, which is the rate that the insurance pays for each treatment or appointment, compared to what the insured will pay. While both the deductible and the coinsurance or copay will be paid by the employee, it is important to evaluate these items when reviewing health plan options. A benefits consultant can assist you in assessing each plan’s premium, deductible and coinsurance rates.
Types of Health Networks
There are many types of health plans available, with each having certain advantages and disadvantages. Understanding the virtues of each plan is critical to picking the right option for your company. This knowledge can then be applied to your specific situation — number of employees, geographic area, employee needs — to help determine which plan would work best for your organization.
Health Maintenance Organizations (HMOs)
Health Maintenance Organizations, or HMOs, are restricted networks of health care providers. In an HMO, patients select a primary care physician (PCP) from a list of eligible providers. This PCP then coordinates the patients’ medical care, including making referrals to any specialists. Other than for emergency care, patients cannot see medical providers without a referral from their PCP. Patients are limited to the HMO network, and will likely be required to pay most of the cost of visiting an out-of-network medical professional. The cost of health care for the patient is typically less expensive in a HMO compared to other plans, with most in-network medical care covered with a copay.
While premiums are higher for HMOs, the deductible is usually low. These plans often do not have a lifetime maximum benefit amount. With these lowered costs comes a significant drawback: patients are limited to the network of HMO providers. Carefully consider whether the HMO network is sufficient to cover your employees’ healthcare needs before purchasing this type of plan. A benefits consultant from BBG can help you evaluate whether a HMO will meet your business’ needs.
Preferred Provider Organizations (PPOs)
In contrast to HMOs, Preferred Provider Organizations (PPOs) have an open network of medical professionals. The plan negotiates lower rates within this network so that patients can seek care from their provider of choice, without a referral, regardless of whether or not that provider is in-network. Coverage for out-of-network providers is usually lower than within the PPO network because the plan has not negotiated lower rates with these providers.
Premiums are similar in cost to HMOs, but PPOs usually have a higher deductible. The biggest advantage of PPO plans is the flexibility, as patients are not limited to certain providers and are not required to have a PCP coordinate their care and refer them to specialists. Major procedures, such as expensive MRI tests or surgeries, often require pre-authorization from the insurer.
HMOs and PPOs are the two main types of plans, but other health care plans offer variations on these options. Point of Service Plans (POS) combine the features of HMOs and PPOs. Patients using POS plans are required to pick an in-network PCP who coordinates their care and issues referrals to specialists. Patients can then choose to see either in-network or out-of-network physicians. Visits to out-of-network providers will cost more than in-network providers, unless a PCP refers the patient to that specific doctor.
An Exclusive Provider Organization (EPO) functions much like a HMO, but without the requirement that a PCP coordinate patient care. The network of providers is closed, so patients are not reimbursed for seeing doctors outside of the network. Pre-authorization is typically required for major expenditures. High Deductible Health Plans (HDHP), or Consumer Directed Health Plans, is a type of PPO.
These plans have low monthly premiums and high deductibles, and work well for patients with few health problems. Patients can deposit money into a Health Savings Account (HSA) on a pre-tax basis, and then use that money to pay for medical expenses. Please visit our blog for more information on the difference between PPO and POS plans, or the difference between HSA, HRA, and HMO plans.
Contact The Business Benefits Group Today
Deciding which health insurance plan is right for your company is a complicated decision, and should not simply be made solely on the basis of which plan has the lowest monthly premium. A benefits consultant can help you evaluate each option, comparing the benefits of each plan to your employees’ needs. Contact a The Business Benefits Group today by giving us a call or sending us a message online to figure out what health plan option is right for your business!