Before making a decision on behalf of your staff or group members, it’s important to understand the options available and what the differences are between them. Let’s take a look at some of the basics of group health insurance options and what the terms actually mean.
HMO – Health Maintenance Organization
An HMO is a type of plan that limits your doctor choices to a network of physicians that are contracted within a certain organization (think Kaiser), often around a certain service area or job. You can still see medical professionals outside of your network, but typically with a much higher cost. HMO’s require selecting a primary care physician, who then writes a referral for any specialized services.
PPO – Preferred Provider Organization
A PPO has a list of medical providers that they “prefer,” but you are not limited to only those doctors, nor is a referral required to see a specialist. Going outside of a PPO network usually means paying the full cost out of pocket, filing for reimbursement and a lesser benefit payment from the insurance.
HSA – Health Savings Account
An HSA is one way of offsetting the costs of a high deductible, especially for employers offering benefits. Sometimes it’s more cost effective to offer a high deductible health plan in combination with an HSA account that offsets the costs of care for employees. Since HSA’s are tax-exempt, it’s a great way to cover qualified medical expenses without a huge out of pocket spend down. For information on yearly contribution limits, see this document from the IRS.
POS – Point of Service
A Point of Service plan is somewhat like a mix of an HMO and PPO. Like an HMO, employees choose a primary doctor from within a network. With a referral, however, patients can choose to see a health care professional outside the network without having to pay for the full cost out of pocket.