Group Medical insurance protects us all from way more than just the occasional ER visit. Health care can keep your employees happy, working efficiently, and out of debilitating medical debt. Beyond the government requirements for providing your employees with access to coverage, a good health care package is often used as an incentive to hire the top people in your industry.
Most business owners provide health insurance through group plans which are backed by organized medical networks. There are several types of networks, the most common being: HMOs, PPOs, POSs and HSAs.
If you are in charge of choosing a plan for your company, it is important for you to understand the facts about each type of plan, and how each could impact your employees.
Let’s review some of the basics about each plan …
Health Maintenance Organization Plans (HMO)
An HMO group health insurance plan will meet the medical needs of your employees who enroll through a managed system of medical care. They work with a group of doctors, medical personnel and facilities to provide the necessary services your people request. Each person under the plan is required to pick a primary care physician who will then direct his or her medical needs through one of the system’s clinics.
Preferred Provider Organization Plans (PPO)
A PPO is a group system of health care organized by an insurance company. Physicians, health care providers of all types, hospitals and clinics sign contracts with the PPO system to create a network of preferred providers to care for your employees at discounted costs. These medical providers accept the PPO’s fee schedule and guidelines for its managed medical care. PPO’s will cover out-of-network costs, but you will pay a bit more.
Exclusive Provider Organization Plans (EPO)
An EPO is a type of managed care system known as a network. It is made up of care providers which network members must choose between. Although exceptions may be made for emergency situations, at all other times you must be seen by medical provider in your approved network … you may have heard someone talk about needing an “In Network” doctor, that’s this type of plan. Most EPOs require policyholders to choose a primary care physician who will handle most medical issues, and will issue referrals for specialists. EPOs generally focus on preventative care, and encourage plan subscribers to take steps to stay healthy at all times. One benefit of an EPO plan is that we are able to negotiate lower rates with health care providers for you over other types of plans, because EPO members are restricted to in-network doctors only.
Health Reimbursement Accounts (HRA)
An HRA, also known as Health Reimbursement Arrangements are employer-funded, tax-advantaged health benefit plans that reimburse employees for out-of-pocket medical expenses and individual health insurance premiums that are paid for medical care. Using a Health Reimbursement Account yields tax advantages to offset health care costs for your team.
Health Savings Accounts (HSA)
We are all constantly searching for affordable health care options, and a Health Savings Account is the very best option. It is meant to replace high cost, low deductible health insurance policies that are simply not feasible for many Americans. It can also be used to supplement employee retirement accounts if an employee is healthy and wishes to keep the money in an account that will grow with tax advantages.
High Deductible Health Plans (HDHP)
This option for health insurance called High Deductible Health Plans (HDHP) began in 2003 as an alternative to the plans offered by HMOs and PPOs that promise low deductibles, but only by charging high premiums. Combining a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA) provides traditional medical coverage with a tax free way to build funds that cover medical expenses today and in the future.
Point of Service Plans (POS)
A POS is also a managed-care health insurance group plan with characteristics of both an HMO and a PPO. It offers more flexibility for picking your own providers than HMO plans, but not quite as much as a PPO.
Self-Directed Health Plans (SDHP)
A SDHP combines the features of a PPO-based plan with the added feature of a Self-Directed Account (SDA). The SDA is funded with a maximum quarterly allowance to use for certain types of routine or preventive care services. Unused funds roll over to next year, allowing enrollees to save for health care expenses that may pop up down the road.
How would you differentiate a small business from a large?
A small business is any organization with 2 or more people working together for payment. Once you have more than 50 people in your organization then you are considered a large company. At that time we would want to talk about more than just medical insurance to keep your company protected.
Do I need to qualify in order to have an HSA or HRA account?
When you choose a High Deductible Health Plan, your income level determines whether you are eligible for an HSA or HRA policy. If you are enrolled in Medicare, you are not eligible for an HSA. The HDHP with HSA or HRA gives you greater flexibility for using your health care benefits. You can pay your deductible with funds from your HSA or HRA. If you have an HSA, you can also choose to pay your deductible out-of-pocket, allowing your savings account to grow.
What are the steps for getting a POS plan started?
In a POS plan, you select a primary care physician from a list of participating providers, just like you would with an HMO plan. All your medical care is directed by this physician, so he or she will be your “point of service.” This doctor will normally refer you to other in-network physicians if you have a need for a specialist. There is a broad base of medical providers in the network which typically covers a wide geographic area.