Group Insurance Health Plan Comparisons

The compensation of physicians varies under different health care plans.

One of the most common ways employers try to attract or maintain staff is with health care coverage. But types of coverage vary, and unless the worker understands what is being provided, mistakes in evaluation of their worth are easy to make. Two of the most common offers are Preferred Provider Organizations (PPOs) and Health Maintenance Organizations (HMOs).

HMO

Health Maintenance Organizations offer medical coverage for a flat cost. Each paycheck, a premium is deducted from the worker's check to pay into the HMO. In return for this, the HMO provides for the medical needs of the covered individuals. When you enter coverage under an HMO, you will have to select a Primary Care Physician. You will see this doctor first and if you need further care, he will refer you to a specialist within the network.

PPO

Preferred Provider Organizations have some of the features of HMOs. They also make use of a network of health care providers and charge a premium. However, PPOs also require the covered individual to pay money out of pocket up to a certain, predetermined amount. The covered worker selects the amount of this sum, called a deductible. The insured will also have to pay some of the costs of care after the deductible is met, usually about 20 to 30 percent.

HSA

Health Savings Accounts are available to people who have a high-deductible health plan. These accounts allow people to save money tax-free for later use in paying medical expenses. This reduces their taxable income, and the money can be invested so it can grow, tax-free, until it is needed. This is unlike insurance, in that the money always belongs to the account owner. Penalties and taxes may have to be paid if it is withdrawn for reasons other than medical needs, but it is accessible.

Pros and Cons (HMO)

The comprehensive nature of HMOs make them attractive options. Other than procedures that have little medical necessity, like cosmetic surgery, a wide variety of medical services are available. There is no deductible to pay and no co-pay each time services are rendered, and the patient doesn't have to share in the costs of care. On the other hand, the premiums for HMO care are considerably higher. In a sense, people covered under these plans pay for those services every paycheck, whether they use them or not. Also, HMOs do not qualify a person for opening an HSA.

Pros and Cons (PPO)

People or families covered under PPOs pay much lower premiums. If they remain healthy, this saves considerably in the long run. Some PPOs (high deductible health plans) also qualify the insured for opening a HSA. The higher deductibles are set, the lower monthly premiums will be. If someone does suffer severe (that is expensive) illness or injury, the HSA can be tapped to meet that higher deductible. If no such event occurs, then the low premiums and tax advantages offer benefits. However, if frequent or protracted illness presents, then the HSA can be depleted and the co-insurance (patient's share of medical expenses) can be burdensome.

References

• University of Illinois: Managed Care Plans
• HMO vs. PPO Comparison