Question:
What is the difference among HMO, PPO and POS health insurance plans? Which is best for a small business?
Answer:
The size, needs and financial situation of a company are deciding factors in what kind of health plan or health insurance will be offered to a company. Larger companies frequently offer a choice of health plans or insurers, while smaller businesses tend to have price restraints, and are only able to offer one insurance provider.
Health Maintenance Organization (HMO)
On average, HMOs are the least expensive health option and the least flexible. Doctor's visits, preventive care, and medical treatment are given in exchange for a monthly premium as well as a co-pay of roughly $5-$10. To keep its costs down, HMO requires that you only see doctors who are in your HMO network.
As an employer, you can decide what percentage of prescriptions is covered by HMO and what percentage the employee will be required to pay. The coverage price may range anywhere from a co-pay of $5 for some drugs, to a co-pay of almost the entire amount for others. It is all at the discretion of the employer.
By law, an HMO cannot require referrals for emergency care, so the only time an HMO will pay for medical care without a referral is for emergency room treatment. HMO does require patients to select a "primary care physician," to take care of your routine medical needs. This doctor is also able to refer you to a specialist within your HMO if needed.
A PPO is more flexible than an HMO insurance plan, allowing you to visit out-of-network providers, and does not require a referral from your primary physician, but it does come with a higher premium. The $5-$10 co-pay gives you financial incentive to remain in your network. Straying from your PPO network could mean that you will have to pay for the treatment and submit the receipt to your PPO insurance provider for a partial reimbursement. A PPO generally reimburses up to 80% of out-of-network costs.
Point-of-Service Plan (POS)
The POS plan is like a combination of the HMO and PPO plans. You are required to designate an in-network physician to be your primary health care provider. You are able to go out-of-network if you so choose, but in doing so, you will have to pay most of the cost yourself, unless a primary care physician refers you to that specific doctor. In instances like that, the health plan will then pick up your tab.
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