The Main Types of Group Health Insurance (PPOs, HMOs, CDHPs, and More!)
Posted on: November 18, 2019 by iSure
Group health insurance plans provide coverage, usually comprised of company employees or members of an organization. Members usually receive insurance at a reduced cost because the insurer’s risk is spread across a group of policyholders. The premiums are split between the organization and its members based on the plan. Getting a group health insurance quote can help you decide what is best for your business.
Group health insurance is not a one-size-fits-all benefit. There are several different options available, and they are all suited to different types of businesses and professionals. Here at iSure Insurance Brokers, we offer PPOs, HMOs, CDHPs, and traditional plans. Take a look at what these options are and see what would be best for your business.
Preferred Provider Organizations (PPOs)
PPO professionals contract with the insurance provider to render subscribed participants services at an agreed-upon reduced rate. In exchange for reduced rates, insurers pay the PPO a fee to access the network of providers.
Providers and insurers negotiate fees and schedules for services. PPO participants are free to use the services of any provider within their network. Out-of-network care is available, but it costs more for the insured. PPO plans tend to charge higher premiums since they cost more to manage. However, they offer more flexibility compared to alternative plans. PPO networks are large, with providers in many cities and states. The flexibility in choosing a provider or accessing a provider in urgent situations provides value to participants.
Health Maintenance Organizations (HMOs)
Health maintenance organizations (HMOs) provide health insurance coverage for a monthly or annual fee. An HMO limits member coverage to medical care provided through a network of doctors and other healthcare providers who are under contract to the HMO. These contracts both allow for premiums to be lower than for traditional health insurance.
Medical professionals in contract with the HMO are paid an agreed-upon fee to offer a range of services to the HMO’s subscribers. This allows for lower premiums than other types of health insurance plans while retaining a high quality of care. Also, there are typically low or no deductibles. The insured may have to live or work in the plan’s network area in order to be eligible for coverage.
Consumer-Directed Health Plans (CDHPs)
A Consumer Directed Health Plan (CDHP) is a strategy that requires insureds to make decisions about their health care.
A CDHP typically offers a high-deductible health plan paired with a spending account for out-of-pocket costs such as a Health Savings Account (HSA) or Integrated Health Reimbursement Arrangement (HRA). CDHPs encourage employees to make informed decisions and spend wisely – which can lead to lower costs for the company.
Employer-sponsored group health insurance plans emerged in the 1940s as a way for employers to attract employees when wartime legislation mandated flattened wages. This was a popular tax-free benefit which employers continued to offer after the war’s end, but it failed to address the needs of retirees and other non-working adults. Federal efforts to provide coverage to those groups resulted in the Social Security Amendments of 1965, which lead to Medicare and Medicaid. Government-sponsored health plans continue to provide care to those left out of employer-sponsored group health insurance plans.
We hope this guide has answered some of the questions you have about group health insurance. Speak to an agent today to get a group health insurance quote or to further discuss plans for your business.
About iSure Insurance Brokers
After serving leaders in the Greater Miami market for more than three decades, iSure Insurance Brokers has become the provider of choice for discerning commercial clients and individuals alike. Because no two insurance programs are or should be alike, you can be sure that iSure will craft a comprehensive approach to protection that is as unique as you are. We welcome the opportunity to protect what you have worked so hard to build. Please contact us at (305) 223-2533 to learn more about what we can offer you.