How to Pick Between HMO, PPO and POS Group Health Insurance

Shopping for a group health plan for your business can be confusing. The ultimate goal is to get a plan that meets your and your employees’ needs at a cost that fits within your budget. One of the most important decisions involved will be your choice of the healthcare delivery plan to suit your needs. Will it be an HMO, a PPO or a POS? Here’s how to make your selection.

Difficulty: Moderate

Instructions

1. Learn the Basic Difference Between the Three Health Plans
   
   The HMO or Health Maintenance Organization comprises in a network of physicians and health facilities that are contracted to provide medical care to the HMO members. Under this plan
   *You are required to choose one primary care physician who directs your care.
   *You are limited to using in-network doctors and hospitals except in an emergency or by referral from your primary care physician.
   *You need to make a co-payment (a flat fee you pay for each doctor visit).
   
   The PPO or the Preferred Provider Organization Plan also uses a network of physicians and medical facilities. However, unlike the HMO, you have the option of using an out-of-network health care provider or facility without prior approval. In this case, however, you will have less coverage and may have to foot part of the bill.
   *An annual out-of-pocket deductible applies before your insurance company begins to pay for your medical care.
   *Co-insurance applies. This is a preset percentage of the covered costs that you must pay out of pocket.
   
   The POS or Point-of-Service Plan is much like a hybrid of an HMO and a PPO. It allows you to go to any doctor or medical facility of your choice with no restriction. However, co-insurance and an annual deductible also apply.

2. Compare the Features and Benefits of the Different Plans
   
   HMO Plan
   *This tends to be the least expensive of all the group health plans.
   *It offers the lowest out-of-pocket costs, as there is no deductible or co-insurance required.
   *There is a focus on preventive health care through wellness programs and other similar initiatives.
   *There is a risk that you may not get the healthcare services you require because of the strict restriction on using in-network providers.
   
   PPO Plan
   *A PPO offers your employees greater choice and freedom while controlling healthcare costs.
   *There is greater access to specialists who may only be available from out-of-network providers.
   *Using an out-of-network provider effectively reduces your coverage, costing you more out-of-pocket.
   *It is difficult to estimate your out-of-pocket expenses.
   
   POS Plan
   *A POS offers your employee the greatest freedom of choice regarding their health care. However, they charge the highest monthly premiums and have the highest out-of-pocket expenses. Like a PPO, it is difficult to estimate out-of-pocket medical expenses

3. Determine which plan meets your employees’ needs and your business situation:
   *Older employees prefer health plans with excellent drug coverage, while higher deductibles will appeal more to younger, single employees as these mean a lower premium
   *Estimate your employees' needs for prescription drugs, mental health services and well-child care.
   *Consider the cost sharing options offered by each plan. A high deductible PPO offers lower monthly premiums, but means higher out-of-pocket expenses.

4. Determine which plan offers the best combination of health coverage for your employees at rates that fit within your budget.