If you own a small business and are considering purchasing health insurance for yourself and your employees, you must familiarize yourself with the different types of policies. By understanding the basic differences between the most common group medical programs, your task of choosing the most appropriate coverage for yourself and your workers will take less time and be less cumbersome.
HMO
Health Maintenance Organizations are among the most popular and least expensive health insurance plans for small business owners. HMOs utilize a network platform that requires covered employees to seek treatment from only those physicians participating in the carrier's network arrangement. Anyone who receives medical services from a non-participating physician or facility must pay the entire cost of those services, as HMOs only pay benefits for approved treatment received in-network. Examining the size and scope of an HMO network is essential to ensure you and your workers have access to a wide enough array of professionals within a realistic distance.
PPO
Preferred Provider Organizations comprise the second most popular type of group health insurance plans for small business owners. These policies operate in a similar fashion to HMOs, where benefits are paid for services rendered by in-network physicians. However, PPOs offer the added advantage of allowing covered employees to seek treatment from non-participating providers. When services are performed in-network, the out-of-pocket expense for the employee is lowest; treatment rendered by non-participating physicians results in higher expenses for you and your employees, but the insurance carrier ultimately pays the majority of the bill.
POS
Point of Service plans are a hybrid between an HMO and a PPO. Some of the freedom and flexibility associated with a PPO policy is built into the POS plan, but the product still retains the bulk of the restrictions of an ordinary HMO. These plans still require you and your employees to seek treatment from within an established network, but offer some out-of-network benefits if your primary care physician refers you to a non-participating provider. Payment for treatment rendered by physicians outside the network is only approved if your family physician specifically referred you to that facility.
HSA
Health Savings Accounts are much less common than the aforementioned types of group health insurance, but continue to increase in popularity. HSA policies have two components -- a high- deductible health plan and a specialized bank account. You and your employees enroll in an HSA-approved policy, typically a PPO or HMO co-insurance plan. Each worker is provided with an individual bank account into which pre-tax dollars are deposited by way of payroll deduction. The money from the bank account must be used properly to pay for approved medical expenses. As long as those funds are not misappropriated or misused, any growth within the account remains untaxed.
