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| Types of Group Health Insurance |  Within the last fifteen years, a dramatic shift in employer-sponsored group medical insurance has been noticed. Cost savings and increased options for employers have led the shift away from traditional group medical insurance and towards HMO and PPO alternatives.
There are four main types of group medical insurance:
- Traditional
- Health maintenance organizations (HMOs)
- Preferred provider organizations (PPOs)
- Point of service (POS)
Traditional
The biggest advantage of traditional group health insurance is the flexibility it provides employees. Traditional group health insurance, also known as indemnity coverage, allows individuals to visit any doctor or hospital they want and receive coverage for any cure covered under the policy. Clientele can go to any specialist without a referral, and the insurance company has no say as to whether or not the visit is necessary. Unfortunately for people who prefer this flexibility, not many employers offer traditional group health insurance now.
The main reason of their rarity is cost. Because there are few cost-saving measures, premiums for traditional insurance are higher than for other kinds of plans. This raises costs for both employers and employees. This type of group health insurance also carries more out-of-pocket expenses.
Health Maintenance Organizations
HMOs were the first alternatives to traditional group health insurance. Due to creating a network of physicians and hospitals and providing cost-saving measures, Health Maintenance Organizations are able to regulate costs better than other plans. On the whole, HMO premiums are the lowest of any type of group health insurance plan.
Nevertheless, HMOs are also the least flexible type of health care plan. They demand members to pick a primary doctor who performs basic medical observations and confirms visits to other doctors. These group medical insurance plans cover only the expense of member visits to physicians and hospitals that are part of their network. Visits to other physicians must be paid directly by the employee.
Preferred Provider Organizations
PPOs are now the most popular alternative for employer-sponsored health care. A PPO is an aggregation of doctors and hospitals that accede to provide health care at a reduced cost to PPO members. Because of this, they can limit health care costs without the limitations of an HMO.
Almost all PPOs are quite similar to traditional group health insurance policies, except one thing: there are two different levels of coverage depending on which providers you use. For visits to physicians and hospitals that are affiliated with the PPO, patients pay a low deductible and little or no co-insurance. Visits to nonparticipating physicians and hospitals are not as fully covered, requiring higher payments from the patient.
Such structure has been designed to encourage PPO clients to use certain doctors and hospitals. These doctors and hospitals agree to provide health care to PPO clients at lower rates, which allows the PPO to reduce overall health care costs.
Point of Service
POS, also known as an open-ended HMOs, plans includes elements of both HMOs and PPOs. As with an HMO, clients select a primary doctor who will provide referrals when needed. Nevertheless, they also can visit out-of-network doctors if they want, with or without a referral – and the plan will still cover the expense, to some degree. But, clients that use services of out-of-network physicians have to pay more than they would for in-network services. That’s why the cost typically involves deductibles and coinsurance, almost as traditional fee-for-service plans.
POS plans are popular with some employees because they provide much of the cost savings of HMOs, but still include some coverage if the member wants to select a certain physician.
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