As an insurance broker, we help a lot of business owners who are looking to set up a group health insurance plan for their team. One of the most confusing aspects of the decision process is figuring out the best type of group health insurance plan.
Each type of Group health insurance plan works in a slightly different way. It is good to understand the differences, and what each of the names stands for. Here are the most common types of group health insurance plans that are available.
Health Maintenance Organization (HMO)
A Health maintenance organization will offer a list of providers that are covered with your insurance and will usually require that you choose a primary care physician or provider.
This primary care provider is then responsible for coordinating all of your healthcare needs. With a limited network of providers and having a primary care provider this helps to keep the HMO premium costs lower.
If you need to see a specialist under an HMO plan, you’ll need to go see your primary care provider for a referral first before you can visit the specialist.
HMO plans are very popular and often have deductibles as well as copays for non-preventive care visits. However, they usually prohibit you from seeing out-of-network healthcare providers unless it is is an emergency, or is prearranged by your primary care provider and approved by the insurance.
Preferred Provider Organization plans (PPOs)
A preferred provider organization (PPO) offers a list of providers that the insurance company allows you to see as in-network providers. These providers have pre-negotiated rates with your health insurance plan, which helps to keep the insurance plan costs down. You may also be able to visit out-of-network providers, but at a higher cost than in-network providers.
Unlike with HMOs, most PPOs don’t require you to visit a primary care provider to get a referral to see a specialist. Instead, you can visit the specialist directly. You will typically have copays or coinsurance for any non-preventative care and an annual deductible with a PPO plan.
Exclusive Provider Organization (EPO)
An exclusive provider organization plans (EPOs) offer a network of providers for you to choose from. These plans have no coverage for healthcare providers considered ‘out-of-network’ from their plans.
You can only visit the providers in the network to be covered unless there is a medical emergency. If your visit to an out-of-network healthcare provider is considered a non-emergency, the visit won’t be covered and you are responsible for all costs. You may also be responsible for a deductible, copayments, and/or coinsurance under EPO plans.
High Deductible Health Plan (HDHP)
The high deductible health plan (HDHP) is another type of health insurance plan, similar to a PPO, but with a high deductible. These types of health insurance plans require you to pay the deductible before they cover most services, but are usually much cheaper than other types of plans.
Additionally, you can usually qualify for a health savings account (HSA) with many HDHP plans. HSAs can offer additional tax savings on your medical costs by allowing pre-tax contributions or a tax deduction for money contributed to an HSA. Money in an HSA account can be used for qualified medical costs without paying taxes.
Point of Service (POS)
Point of Service (POS) healthcare plans offers flexibility that other types of plans do not. These plans typically require you to have a primary care provider that you visit for preventative care visits as well as to get referrals.
However, rather than being limited to in-network providers only, you can usually visit out-of-network providers if you’re willing to pay the higher cost for their services.
Visits to the primary provider and the referred specialists may not be subject to the deductible, but visits outside of those guidelines usually require you to pay the deductible first. Out-of-network visits can also require you to pay the provider directly and file paperwork to be reimbursed by the plan.
How To Choose the Best Group Health Insurance Plan
It might seem like a wise move to choose a health insurance plan with the lowest possible premium. However, there are several drawbacks to this approach.
Instead of buying based on the cost of premiums alone, think in terms of the benefits you seek for yourself and your employees. The monthly cost should be just one aspect you consider when selecting a group healthcare plan.
Take a look at the typical out-of-pocket expenses you will likely incur as part of your health insurance plan. Generally speaking, the lower the premium, the higher the out-of-pocket expenses will be for those who are part of the plan.
This is also the case for the deductible. Many people are surprised that they must pay a large amount of money upfront before their health insurance plan will pay any costs for their medical treatment.
Taking Care of Your Teams Health
Offering an affordable group health plan is an excellent way to attract and retain great employees. If you have a small business with between 2 and 50 full-time employees, you qualify to begin building a custom health plan.
There are many choices that are available in custom tailoring a health plan to meet your employee’s, however, the process of deciding can be daunting. but by taking a few considerations to heart, you can smoothly implement a plan that works.
If you are looking to compare different types of health insurance plans, then a great place to start is by talking with an experienced insurance broker. They can help answer many questions that you may have when looking at purchasing health insurance plans for your business.
As you learn more about the different plans, their costs, and what is (or isn’t) covered, you will start to get a clearer idea of which group health insurance plans work for you.