Medical Insurance

Health Maintenance Organizations (HMOs)

HMOs include primary care providers (PCPs), specialists, hospitals, and ancillary providers. Coverage usually only works with in-network providers unless there is a true emergency.

Key features:

• Preventive care through annual physicals
• Co-payments for PCP or hospital visits
• PCPs provide treatment and refer patients to specialists, pre-certify surgery or hospitalization, and pre-authorize any lab testing.

These are the least expensive option with the lowest level of freedom. Generally, these are regional plans, so coverage is limited outside of your normal area.

Point-of-Service (POS)

POSs have an HMO for in-network coverage while allowing for out-of-network options. This gives the insured the option of who they want to see for their care. Using the in-network providers will result in fewer expenses, though out-of-network services may be reimbursed at coinsurance levels (generally 70%-80%) after the deductible has been paid.

Key features:

• HMO benefits with services are made through a co-payment
• Insured’s choice for out-of-network providers subject to deductibles and coinsurance expenses
• The insured is responsible for pre-certification and pre-authorization for out-of-network care.

These are more expensive to provide than HMOs.

Preferred Provider Organization (PPO)

PPOs have a larger network than HMOs, so the insured can access a provider of their choice without need for a referral. Those insured can also make choices outside of their PPO network.

Key features:

• In-network care requires a co-payment, deductible, and/or coinsurance
• Out-of-network care generally sees higher deductibles and lower coinsurance reimbursement levels
• PPOs likely have a larger geographical range, so trying to find care outside of our typical area is made easy.

Employees receive the greatest amount of choice with a PPO, though this is the most expensive option.

High Deductible Health Plans (HDHP)

Preventive services are totally covered under this plan. All other services or prescriptions fall under the deductible, which must be paid up to a point of the employer’s chosen plan. After this deductible has been met, you will own a percentage cost with out-of-pocket maximums protected.

Key features:

• 100% covered preventive care
• Access to doctors, specialists, and hospitals
• Choice of HSAs, HRAs, or FSAs for out-of-pocket expenses
• Discounts for health and wellness programs

Exclusive Provider Organization (EPO)

EPOs are very similar to HMOs. However, there are a few key differences. EPOs have service-negotiated rates, whereas HMO rates are based per person. EPO providers only receive payment for services that they provide, while HMO providers earn monthly payments from the insurance carrier. EPOs tend to cost less than HMOs, but EPO members are unable to make a claim for an out-of-network provider.

Prescription Drug Coverage (Rx)

Most Rx coverage is under a Managed Care plan. In most cases, they are purchased through co-payment, though some plans include a deductible. Drug cards will have different co-pays listed for the type of Rx: generic, preferred brand name, or non-preferred brand name. There are also mail-order programs that offer a 90-day supply of prescriptions at lower total costs.

Administrative Services Only/Self-Insurance (ASO)

In most cases, insurance rates change based on how a region’s companies and their employees are pooled together and claim their benefits. So, companies with healthier employees with lower claim usages offset those who pick up larger medical expenses.

An ASO allows a company to save money in years where the number of claims made is lower than expected. In years where the number is higher, stop loss insurance protects the company.

Key features:

• Companies only pay for claims made by their employees, not a regional pool of employees from other similar-sized enterprises
• Flexibility to make their own benefits program to save money on expensive state-mandated benefits that are not needed by staff
• Stop loss insurance protects a company for a major claim (including aggregate stop loss for situations where multiple employees are submitting extremely expensive claims)
• Small administrative fee is paid to the insurance provider