Health Insurance 6
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What are Preferred Provider, Point of Service Plans and health maintenance organizations?
Preferred provider organizations (PPOs), health maintenance organizations (HMOs) and Point of Service (POS) are three forms of something known as managed care plans, which are plans designed to reduce health care costs.
HMOs are both the insurance company and the health care provider. With some HMOs, insured individuals usually must use the HMO health care providers unless there is no suitable HMO specialist or other provider available within the HMO. If that is the case, the individual will be referred to an approved provider outside the system. The primary advantage to the insured is that actual out-of-pocket expenses can be just a couple of dollars for each doctor's visit or prescription. The disadvantage is that it may not have any coverage for health care services performed by doctors or facilities that are not part of the HMO, which can be a major problem if you should be dissatisfied with the doctors or treatment plans offered through the HMO.
Preferred provider (PPO), and Point of Service (POS) organizations operate a little differently. Typically, health care providers who participate agree to accept payment at fees specified by the PPO and charge the patient a slightly higher co-payment than the patient would pay at an HMO, (Co-payment in one preferred provider plan is $10, for instance.) If the insured would rather choose his or her own health care provider, however, he or she can and will be reimbursed for out-of-pocket expenses the same as under traditional health care (fee for service) plans. The benefit of a PPO or POS is that the premiums may be 10 to 15 or more percent lower than traditional indemnity health care premiums, and the out-of-pocket expenses for routine checkups and tests may be lower, too. And, claim reimbursements are prenegotiated with managed care plans, resulting in significant discounts and fewer surprises. Potential disadvantages could be lower benefits if you choose doctors who are not part of the system.
Would I be better off trying to get coverage for my employees through an HMO, PPO, or POS instead of through more traditional group plans?
Only you can make that decision based on your needs and the needs of your employees, however, traditional “fee for service” indemnity plans have become out of fashion in most areas, and are not usually worth the added cost, unless there is no network penetration in your area. Look at the plan details, coverages, list of preferred providers, and premiums for all plan types before making a decision about what to purchase.
An insurance broker who called here tells me he can get insurance for my employees at a much lower rate than I am paying now. Is it wise to switch companies just for rates?
"One of the things small businesses need to watch out for is the difference between new business rates for group insurance and the in-force rates," warns Hal Zoller, It is not uncommon for companies to be notified of rate increases of as much as 50 to 100 percent when their policies renew. At the same time the insurance company may be advertising the very same plan at a very low "new business" rate. "If continuity of coverage can be maintained, the new plan appears to have a successful record and you can save more than twenty-five percent, the switch might be worthwhile if benefits are comparable to what you now have," says Zoller.
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