There are millions of businesses in the United States, and roughly 28 million of them are considered small businesses. Those small businesses employ 52.6 million Americans, and many of those small businesses need to provide health insurance to their team. In some cases, if you have a business that employs less than 50 employees, you actually may not legally need to offer health insurance. Nonetheless, many businesses choose to offer health insurance options to their employees.
Some business shows appreciation for their employees by offering a health insurance benefit plan. It says that the employer values their employees and that their health is important to the employer and to the business. One of the major tasks that an employer will undergo when deciding on different health insurance options is determining the most beneficial type of plan.
This may require choosing between a POS plan or a PPO plan (or both). Both types of plans offer unique advantages and disadvantages, and the business needs to weigh the pros and cons from both the employer’s and the employee’s perspective before making a decision.
Point of Service (POS) Plans
A POS plan takes portions of a Health Maintenance Organizations (HMO) plan and a Preferred Provider Organization (PPO) plan and combines them together. POS plans are actually relatively rare compared to either the PPO or HMO plans, making up only 9 percent of the market share. Like an HMO plan, the employee would choose an in-network primary care physician (PCP). The PCP would then provide the employee with referrals to specialists if needed.
Like a PPO plan, POS plans still offer the use of out-of-network services, but the employee will have to pay more if they move out-of-network for healthcare services.
Insurance premiums are also a combination of PPO and HMO plans—usually falling in between the higher premiums of the PPO and the lower premiums offered by the HMO plans. The employee would also make co-payments for services, but in-network services copays are usually only between $10 and $25 per service. POS plans can actually be up to 50 percent cheaper than PPOs for your employees.
- Your employees will have the freedom to choose their own PCP, and they can go out of network if necessary.
- The lower copays and premiums are also very appealing for employees.
- Employees also do not have any annual deductible requirements that your employees will need to be concerned about.
- If employees never go out-of-network, then they may end up wasting part of their premiums.
- Deductibles can be costly for employees, and choosing a plan that has annual deductible for out-of-network plan can be confusing and wasteful.
- There is a lot of paperwork involved in a POS plan, particularly if you have to be reimbursed for out-of-network services.
Preferred Provider Organization (PPO) Plans
PPO plans are far more common than POS plans. A PPO plan is a group of healthcare providers that offers healthcare services for your employees. It is often sponsored through a particular insurance company, the employer, or another organization.
The organization part of the plan allows them to offer services at a discount, reducing the cost of the healthcare for the group as a whole.
Like the POS plan, those on a PPO plan pay for services when they receive them. The employer will usually reimburse the employee for the costs of the treatment. The doctor can also sometimes submit the bills directly to the insurance company for payment, taking the employer out of the equation. The insurance company pays the healthcare provider, and the employee will then pay their co-payment.
- There is no need to choose a primary care physician with a PPO program, so that gives employees a little bit more flexibility when choosing healthcare.
- Employees also have the option of going out of network for care as well, which is not an option in some other types of plans.
- One of the biggest benefits is that there is very little paperwork for both the employee and the employer.
- For employees, a PPO is one of the higher cost options. That does not necessarily mean the employer will pay more, but it could have that implication.
- Employees may need pre-authorization for certain types of care, and this might be something that the employee would have to handle themselves.
- If the employee needs to move out-of-network, then costs can add up quickly.
Choosing the Right Health Insurance Option for Your Employees
Whether you are a large employer or a small business, picking the right health insurance option for your employees is important. It says a lot about how much you value the employees that contribute to your business. You can discuss your full options by calling or by contacting Business Benefits Group online to ask for any additional information on our benefits consulting or business insurance services. Our team of certified professionals can help you make the best decision for your business.