One of the most frequent questions that I get is “Should I offer a PPO plan or an HMO plan to my employees?” When it comes to insurance, everyone has a different opinion and use. What I like about an insurance plan can be completely different from what the employer feels makes a good plan. There are many different choices when selecting a health plan. For example, some businesses may not want the insurance company to cover their portion of the payments until they reach their deductible or may not want to have a deductible at all. When it comes to group medical insurance, it’s about finding plans that fit what you and your employees are trying to do.
One of the biggest decisions when choosing a group health plan is whether you want a PPO plan or an HMO plan. HMO plans are more limited. With HMO plans you must stay in-network, you will most likely need a referral to see a specialist, and the network may be smaller when compared to a PPO. PPO plans give you more freedom than HMO plans, but they typically come with an increased cost. With PPO plans, you don’t need to stay in-network, you don’t need a referral to see a specialist, and the networks are typically larger than those of an HMO plan. Although PPO plans offer more freedom, they typically are more expensive. If you decide to choose a PPO plan and go out of network, please be aware of stated maximums.
If you have a PPO plan (or a hybrid plan like an HMO-POS or an HMO w/OON), a stated maximum is the amount the insurance company has agreed to pay for your specific procedure. When you go out of network, there is no agreement between the doctor you’re seeing and the insurance company. That doctor can choose what he/she charges for services. The insurance company is only responsible for their stated maximum. You are responsible for the remainder amount.
When looking for a plan, many employers strictly look at the deductible, because they are unaware that some of the plans offer coverage before you hit your deductible. This is where co-payments and co-insurance come into play. Co-payments and co-insurance are very similar, except co-payment is always a stated dollar amount and co-insurance is a stated percentage. Also, when looking at group plans, you will need to meet your deductible first with the plans features that have co-insurance. If you have a co-payment, you can typically see a doctor or have a procedure done for the stated amount, so long as it is not followed by after deductible.
When it comes to choosing a health plan, the most important thing to look for are features that you and your employees will use. For this reason, speaking with your employees about insurance is important, because what you may think is good insurance may not be appealing to your employees. Most carriers make the plan selection a little easier by allowing you to choose from multiple plans offered.