HMOs - Health Maintenance Organizations
In a very general sense, HMOs offer predictable cost-sharing and administrative simplicity for patients, along with fairly restrictive rules on which providers patients may see. Participants are entitled to doctor visits, preventive care, and medical treatment from providers who are in the HMO's network. In addition to the monthly premium (which may be shared by the employer and employee), participants usually need to pay a small fee at the time of service, called a copay (often in the range of $10 to $20), and the HMO covers 100 percent of the services provided. Most HMOs use capitation arrangements to reimburse physicians.
HMOs typically require patients to select a "primary care physician" (PCP) who can refer patients to specialists, also within the HMO's network. HMOs often won't pay for medical care that wasn't referred by the primary care physician (some exceptions include emergency services or preventive gynecological exams). They may also require prior authorization for elective care or referrals.
PPOs - Preferred Provider Organizations
Preferred provider organizations (PPOs) generally offer a wider choice of providers than HMOs. Premiums may be similar to or slightly higher than HMOs, and out-of-pocket costs are generally higher and more complicated than those for HMOs. PPOs allow participants to venture out of the provider network at their discretion and do not require a referral from a primary care physician. However, straying from the PPO network means that participants may pay a greater share of the costs.
Many PPOs available to California small businesses reimburse 60 percent of out-of-network costs and 80 percent of in-network costs (with the employee responsible for the remaining 40 percent or 20 percent). These percentages may be applied to full charges ("sticker" prices), discounted fees that the health plan has negotiated with providers ("negotiated fees"), or regional average fees ("allowable" or "usual and customary" amounts).
HSAs - Health Savings Accounts
Health Savings Accounts, called HSAs, can potentially help you save money on health care expenses – and actually put your savings to work earning tax-free interest. HSAs work with high-deductible health plans that can reduce your monthly insurance costs. The money you save can be deposited into an HSA and used for qualified medical expenses – your savings grow tax-free, compounding interest year after year, giving you a great way to save for retirement.
The money in your HSA belongs to you – not to an insurance company and you keep the money even if you switch jobs or move. And with your high- deductible health plan, instead of paying higher premiums for unused coverage, you pay only for medical services you use – the rest goes into your Health Savings Account and is there when you need it for your health – for your retirement – for you.
The maximum contribution allowed by the federal government changes every year. You can contribute over the maximum, but funds over the allowable amount are federally taxable. HSAs can be set up by employers or employees throughout the year. Contributions can be made through payroll deduction, direct deposit or a variety of other ways. Employers who contribute to employee HSAs demonstrate a commitment to them by providing funds that could pay for necessary medical expenses such as check-ups, preventive care and emergency services.
Many health plans have now partnered with financial institutions to make setting up – and using – an HSA quick and easy. Most HSAs will provide you with a debit card and checks so that withdrawing money to pay for medical expenses is easy. Look for a plan that offers those services.
POS - Point-of-Service Plans
A point-of-service plan (POS) is a type of managed care plan that is a hybrid of HMO and PPO plans. Like an HMO, participants designate an in-network physician to be their primary care provider. But like a PPO, patients may go outside of the provider network for health care services. When patients venture out of the network, they'll have to pay most of the cost, unless the primary care provider has made a referral to the out-of-network provider. Then the medical plan will pick up the tab.
Call us today and we will help you choose the right plan, at the right price, for you and your employees.