There are several types of business health insurance plans available in the US, each with its own benefits and drawbacks. The most common plans include:
Preferred Provider Organizations (PPO):
A PPO gives individuals and families access to a network of healthcare facilities and practitioners at reduced rates. They can also get coverage from providers outside of the network (though unlikely to get reduced rates!). PPOs tend to cost more than other types of plan for this reason.
Health Maintenance Organizations (HMO):
An HMO is a more restrictive, but lower cost alternative to a PPO. Under a HMO plan you are restricted to the network of providers listed in the plan. This means you can’t access out-of-network health services unless it’s an emergency. The other key difference is that under an HMO plan you must first see your Personal Care Physician (PCP) and they will refer you to the relevant specialist as they see fit.
Point of service plan (POS)
A POS is essentially a blend of the PPO and HMO arrangements. It’s similar to a HMO in that you begin by choosing a primary care doctor who will then decide whether you need to be referred to other services. But unlike an HMO (and more in keeping with a PPO), it’s possible to use out-of-network services, but you will need to pay more for the privilege. The POS service is priced somewhere between a PPO and HMO.
High-Deductible Health Plan (HDHP)
A HDHP provides a significantly lower health insurance premium in exchange for a higher contribution towards healthcare costs as and when they’re needed. For this reason, they’re often seen as a better alternative for younger, healthier people. In other words, it can represent better value if you rarely ever make a claim, but will be worse value if you need to claim more frequently. Just be sure you can afford the out-of-pocket expenses should a claim be required!
In a Self-Funded Health Plan, a company directly insures its own employees through its own funds, rather than via a third-party insurance provider. The key benefit is that it allows companies full flexibility: they can choose the administrator, choose the hospital network, choose the pharmacy plan and select all the service providers (such as telemedicine, mental health, fertility and more).
A Self-Funded Plan is worth considering for companies employing more than 50 employees with a young healthy workforce – or because they are interested in taking control of their health plan spend and enhancing the quality of care.
Businesses opting for a self-funded plan usually invest in Stop Loss Insurance too. This ensures they have emergency financial back-up in case of catastrophic losses caused by higher than anticipated claims.