Health insurance is an integral part of the benefits package that employers give to their employees. Workers use this to help pay for medical costs and their spouses and children may rely on the coverage too. There are different types of health insurance plans, each with pros and cons. This article will explain four types of programs so employers can choose the one best for their employees.
Preferred Provider Organization
A preferred provider organization (PPO) is among the most common health insurance plans. The insurance company contracts with medical providers like doctors’ offices and hospitals in this plan to create a network.
- No referrals: With a PPO plan, the staff can go to a specialist without a referral, saving them time and money by reducing the number of doctor visits.
- Choosing a physician: People can choose from any primary care physician they want in a PPO. This advantage helps people feel more comfortable by going to a doctor they have known and trusted for a long time.
- Physician discounts: Workers with these plans can get a discounted rate if they choose physicians in the insurance plan’s preferred network.
- Premiums: One of the drawbacks of a PPO plan is the cost of premiums — they’re typically higher than other plans.
- Expenses: The monthly premiums for this plan are higher than others and the out-of-pocket costs can be more, too.
- Required research: PPOs are flexible, but with flexibility comes needed research for the employee. They must do their due diligence to see what hospitals and physicians the plan includes before they use the providers.
Exclusive Provider Organization
An Exclusive Provider Organization (EPO) is a health insurance plan that provides coverage for staff only if they go to a specific list of providers.
- Lower costs: The primary benefit of an EPO is the lower cost. These plans have lower monthly premiums for employees.
- Vast network: Though it’s exclusive, the network for providers is often extensive, giving workers various options.
- Higher deductibles: Though the premiums are lower, EPO plans often have higher deductibles, meaning more out-of-pocket expenses during emergencies.
- Emergencies: If an employee is out of town, they may have to go to a hospital not included in the coverage plan. The worker may then be responsible for picking up the medical bills without help from the insurance company.
Health insurance costs can be high for employers, so some are switching to self-funded employee health care plans.
- Saving money: One of the most significant benefits for employers using self-funded plans is saving money. These plans can help employers avoid state mandate costs because they only follow the Employee Retirement and Income Security Act.
- Flexibility: Flexibility is an excellent advantage in a self-funded plan. Employers can change their coverage anytime, ensuring their staff has the care they need.
- Penalty risks: With self-funded insurers, there is a risk of penalties and lawsuits because it’s up to the employer to determine the health insurance plans. They might not understand the ins and outs of health care laws better than an insurance expert does.
- Demographic skews: An employer may put itself at risk based on the demographic of its workers. The employer may face more health claims if most workers are old and at increased risk for health issues.
Health Maintenance Organization
A health maintenance organization (HMO) plan gives employees a list of medical services they pay for with a predetermined monthly fee.
- Fewer deductibles: HMO plans tend to have fewer deductibles than other health care plans. In a study, the Kaiser Family Foundation found about 43% of people with HMO plans had no deductible, while only about 15% of those with a PPO could say the same.
- Fewer fees: This plan may give staff fewer medical costs. HMOs typically cover specialists inside the network, meaning the workers may only need to cover the copay when they see a doctor.
- Fewer options: HMOs typically have lower costs because fewer providers are in the coverage group. These plans may only be available to employers who live in a service area, making it difficult for far-away remote employees.
- Referrals: Staff can go straight to a specialist with a PPO, but with an HMO, they must get a referral from their primary care provider. Some people may dislike the extra steps in the process. The worker will likely foot the bill for seeing a specialist if they need to see one but can’t get a referral.
Choosing a Health Insurance Plan for Employees
A good health insurance plan is among workers’ highest priorities today and picking the right one can be a tough job for employers. It’s essential to talk with staff and find which plan is suitable for the group, whether it’s a PPO, HMO, EPO or self-funded plan.