Group Health Insurance Basics
Like any successful business person, you must control costs and weigh them against value received. I wonder, though, whether you believe you are getting the best group health plan for the money. It’s not like the terms in health insurance are any help. Is an HMO plan expensive or inexpensive? What about a PPO? Because these terms don’t convey their inherent cost, I thought I would give you a cost and benefit overview of health plan options.
HMO (Health Maintenance Organization)
This is usually the least expensive option, but it is also the least flexible.
A person covered by an HMO cannot visit a doctor outside the ‘HMO network’.
An HMO requires patients to select a primary care physician, a ‘gatekeeper’ who takes care of routine medical needs, such as checkups and basic prescriptions. Primary care physicians can also make referrals to specialists who are part of the HMO network.
The only time an HMO will pay for medical care without a referral is in cases of emergency-room treatment.
HMO plans also include coverage options for prescription drugs. You as the employer decide what percentage of a drug’s cost your employees must bear. This can range from a co-pay of $5 to almost the entire cost of the drug. Obviously, the lower the co-pay, the greater the cost to your business for the plan.
PPO (Preferred Provider Organization)
PPOs cost a little more than HMO plans, but they’re more flexible.
People covered under the PPO can see physicians outside the network without a referral from a primary care physician. Staying within the network, however, reduces the costs to those covered under the PPO.
POS (Point Of Service)
This is a cross between HMOs and PPOs. Those covered by the plan designate a primary care physician but are allowed to go outside the network of providers for additional cost. The exception to this is if a primary care physician makes a referral to a doctor out of the network.
This is the most costly option but offers the most flexibility. Those covered by the plan can go to any physician they wish and the cost remains the same to the patient. You as a business will pay more for this flexibility.
I know health plans and their acronyms can be very confusing, particularly in regard to what they will cost your business. I hope this brief guide provides you enough information to evaluate health plan options.