Request a call Login

  • When shopping for health insurance plans for your employees, you may be overwhelmed by all the different options’ nuances. The prices and coverage can vary widely, so understanding the differences between each plan is essential to determine which suits your situation best. In this post, we’ll discuss the main distinctions between Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Exclusive Provider Organizations (EPOs), and Point-of-Service (POS) plans and weigh the benefits and drawbacks of each program so you can provide your team with the right health plan.

    What Are Provider Networks?

    Provider networks are a collection of doctors, hospitals, facilities, and health care providers and insurer contracts to offer medical care to their insureds at a negotiated rate. For example, if someone uses in-network providers (doctors or hospitals), their out-of-pocket costs will be lower than if they went out of network.

    However, if you choose a plan without provider choice and your employee doesn’t use an in-network doctor, your employee should expect higher out-of-pocket costs because the insurer won’t cover the higher cost of services their contracted providers could have provided.

    What Are The Types Of Health Insurance Plans?

    There are four main types of health insurance plans: HMO, PPO, EPO, and POS. Plans can include the use of a primary care physician (PCP), who is typically the first person someone sees when visiting a doctor and will serve as their main point of contact for medical services. PCPs generally coordinate all aspects of care and can refer their patients to specialists if necessary.

    What are HMOs?

    An HMO is a networked system where a primary care physician can oversee care and refer patients to specialists when required. HMOs require patients to receive care from a determined network of doctors and hospitals and may not cover additional costs if they see an outside physician or seek treatment out of town.
    Because HMOs are so restrictive regarding freedom-to-choose health care providers, they typically have lower out-of-pocket costs for covered services.

    Likewise, suppose your employee needs specialized services such as physical therapy or mammography testing outside regular doctors’ offices/hospitals within their respective networks. In that case, there are additional steps to go through. For example, “pre-authorization” approvals may be required from both their PCP and the specialized physician, plus a sign-off stating why such procedures should occur at particular locations according to the guidelines of their HMO plan.

    Pros:

    • Coordinated care
    • Lower monthly premiums
    • Lower out-of-pocket expenses 

    Cons: 

    • Most restrictive options
    • Higher deductibles 
    • Coverage does not travel 
    • Require referrals

    What are PPOs?

    A PPO is the most common type of network-based plan. This plan allows patients to see any doctor within its network but requires preapproval if they want to see an out-of-network specialist or hospital for services not covered by the plan’s benefits package. With a PPO, your employees can access a network of doctors and hospitals that have agreed to provide services at a discounted rate for their plan.

    Additionally, they can see any doctor or hospital within the PPO’s network, even if the care isn’t in-network with your insurance company, and they’ll pay some or all the cost depending on what level of coverage you have chosen.

    Because there are so many providers available through these networks, there will likely be one nearby where your employees live or work, as well as other locations in case something happens while traveling. There’s additional flexibility when choosing where to go when seeking medical treatment since there aren’t any restrictions based on location.

    Pros:

    • Access to negotiated rates
    • Flexibility to see doctors in and out-of-network
    • No referrals are required
    • Travels with you

    Cons: 

    • Higher premiums
    • Require more preapprovals 
    • Must coordinate and manage your own care
    • Higher out-of-pocket expenses

    What are EPOs?

    An EPO also allows patients to see any doctor within its network but doesn’t require preapproval for non-covered services as long as providers within that network provide them. If you choose an EPO plan, your coverage correlates with the provider’s negotiated rates based on the services performed. Therefore, there are no pre-set prices for procedures or services; it’s up to the individual doctor or hospital what they charge for their services (and how much they’ll accept from your insurer).

    In an EPO plan, PCPs aren’t a requirement, but many people still choose to have one for convenience and ease of coordinating care. However, if you select an EPO plan, your employee’s coverage is limited to the network of providers within the EPO to cover all their medical needs, as there are no out-of-network benefits.

    Pros: 

    • Freedom to see any in-network provider
    • Lower monthly premiums
    • Large networks 

    Cons: 

    • No out-of-network benefits 
    • Higher deductibles 

    What is a POS?

    POS plans fall between an HMO and PPO plan. Members typically need a referral before seeing a specialist, but they still have coverage for out-of-network care—though the copays might be higher than if everything were in-network. Patients must generally stay in-network for services, but they may be authorized to receive out-of-network care if it is medically necessary. However, as with a PPO plan, benefits and coverage may be at a reduced rate.

    Pros: 

    • Flexibility to see doctors in and out-of-network
    • Lower copays
    • Zero deductibles when in-network

    Cons: 

    • Require referrals 
    • Upfront fees
    • High out-of-network costs

    Managing Health Care Expenses

    High deductible health plans (HDHPs) combined with enrollment in a health savings account (HSA) are alternative health care plans with lower premiums and higher deductibles than more traditional plans.

    What are HDHPs?

    The IRS defines HDHPs as any health plan with a minimum deductible of $1,500 for individuals and $2,800 for families. These plans have lower monthly premiums than traditional plans and typically cover less in terms of medical services; however, your employees pay more out-of-pocket if they use their health insurance benefits before meeting their deductible (the amount one must pay before insurance kicks in).

    Healthy individuals may benefit from having an HDHP because they don’t need medical care as often, so they can save money on their monthly premiums. In comparison, people with chronic illnesses or those who are older may end up paying more out-of-pocket when they use their benefits before meeting the high deductible amount each year.

    What are HSAs?

    An HSA allows employees to set aside pre-tax income to pay for qualified medical expenses, including deductibles, copayments, and other out-of-pocket costs. They can also use HSA funds to save for retirement as well as help cover medical costs in retirement.
    Additionally, funds roll over from year to year and never expire, so they won’t lose money if they don’t use it all at once.

    HSAs offer some flexibility when making contributions: if you, as their employer, make contributions directly into their account, those amounts count toward meeting the annual deductible requirement. However, if they make their own contributions (either directly or through payroll deduction), they don’t count toward meeting that requirement but do increase the amount of funds available for future use.

    How To Choose The Best Plan For Your Employees

    Before signing up for a policy, ensure you understand how the plan works and what type of coverage it will provide. You should have sufficient information about each plan and compare their details before making an educated decision about which is best for your employees. Here is a list of questions you should be able to answer before selecting a plan:

    • Are the doctors or hospitals included in the network located where your employees live?
    • Are specific procedures or medications vital for managing chronic conditions such as diabetes or blood pressure covered?
    • Is the plan self-funded or fully insured?
    • What is the size of the network, and how is it structured?
    • Will they use savings options such as an HSA, flexible spending account, or health reimbursement arrangement?
    • What does the pharmacy plan look like?
    • What can your company comfortably contribute?
    • What does the servicing model look like? Who are you purchasing the plan through?

    The Importance Of Understanding The Unique Benefits Of Each Health Insurance Plan

    Health insurance is becoming increasingly complex. A solid understanding of the different types of plans and their benefits is essential to make the best choice for your business and employees. With so many situational aspects affecting families and individuals differently, speaking with an expert to evaluate your needs can be a game changer. That’s where GMS comes in.

    GMS has a team of dedicated professionals who will walk you through the plans based on your specific circumstances, so you know exactly what you’re signing up for. We take care of complicated decisions so you can easily find what’s best for you and your employees. Additionally, by working with us, you can access top-tier group health insurance plans just like larger corporations, but at a reduced price. If you want to find out more about how our buying power will save you money while providing quality care for your employees, contact us today.

  • Health insurance is one of the most sought-after employee benefits, but not all health plans work the same way. There are several different types of group health insurance that differ in terms of how the insurance is purchased and how it affects the group’s premiums and plan options.  

    What Is Group Health Insurance? 

    Group health insurance is a type of health care coverage that’s provided to a group of individuals, typically employees of a company or members of an organization. This form of insurance means that all members of the group are covered under one policy. As opposed to individual insurance policies, where each person’s risk is assessed individually, group health insurance allows for the pooling of risk across all members. This often results in more favorable premium rates for the entire group. 

    One of the key advantages of group health insurance is that it can provide coverage for individuals who might otherwise struggle to obtain insurance on their own due to cost or pre-existing conditions. Employers or organizations purchase the policy and offer it to their members, often extending the coverage to include dependents. 

    Benefits Of Group Health Insurance

    Group health insurance offers numerous advantages for both employers and employees. For employers, it’s a powerful tool for attracting and retaining top talent, as it demonstrates a commitment to the well-being of the workforce. Employees benefit from lower premiums and better coverage options, often with pre-existing conditions covered. The buying power of a group ensures more comprehensive coverage at a reduced cost. In addition, group health insurance plans contribute to a healthier workplace, leading to a reduced absenteeism and increased productivity. Overall, it’s a win-win situation that fosters a supportive and healthy work environment. 

    Group Health Insurance Options

    While all these health plans have certain advantages and disadvantages, it’s up to you to decide which makes the most sense for your needs. Here are some of the common types of group health insurance options available for small businesses.

    Fully-Insured Plans

    Of all the types of group health insurance, the fully-insured plan is one of the more traditional options. Fully-insured plans involve the insurance company taking on the risks involved with healthcare costs and charging your business an annual premium for the benefits in the insurance policy, which is partially paid for by the employees. 

    The insurer uses a variety of factors used to calculate group health insurance premiums, including:

    • Size and health of the group
    • Average age of the group
    • The employer’s claims history
    • Types of occupation
    • Level of coverage and add-on benefits

    Self-Funded Plans

    While the insurance company covers the expense of employee health costs in a fully-insured plan, self-funding places that burden on the employer. This can often lead to more affordable rates and more control over a plan, with the tradeoff of your business accepting the risk of having to pay for any catastrophic claims. 

    This path is often seen as an option for large businesses, but small groups can also take advantage of self-funded plans. Small businesses can opt for a partially self-funded plan with stop-loss insurance. This option limits your risk so that you can still reap some of the benefits of self-funding without taking on the entire burden in case any catastrophic claims occur.

    Level-Funded Plans

    Unlike the more traditional plans with annual premiums, level-funded plans are based on a monthly payment rate. Insurance carriers will use census information to determine the amount your small group should pay. This rate is based on factors like claims allowances, fees, and stop-loss coverage premiums. Once the year is finished, the carrier will adjust the monthly level based on group performance.

    Health Maintenance Organization (HMO)

    An HMO is a group coverage setup where group members pay for specific health services through monthly premiums. Through an HMO, you’ll have access to a network of healthcare providers and locations, but services will be limited to those that fall under that network. This arrangement allows HMOs to be more affordable than other types of health insurance plans, although seeing any physicians or facilities not included in your HMO network can result in a group member having to foot the full bill.

    Preferred Provider Organization (PPO)

    PPO plans are like HMO plans, except with more flexibility. PPOs feature a network of healthcare providers and facilities, but group members have the option to go to physicians or locations without being completely on the hook for the entire bill. Instead, these visits will result in higher co-pays and additional service costs, giving members some more freedom than HMO plans.

    High-Deductible Health Plan (HDHP) with a Savings Option (HDHP/SO)

    An HDHP is based around lower premiums and higher deductibles for group members. This means that members with this type of healthcare insurance will have to pay more out-of-pocket before the plan pays for its share. The tradeoff, however, is that this route allows monthly premiums to be lower, making it a good group health insurance option for employees who don’t use many medical services. 

    In addition, HDHPs can be paired with savings options like a health savings account (HSA). These accounts allow members to make tax-free contributions to an account that can be used to pay for healthcare costs, ranging from copays to major medical services. The funds in these accounts rollover every year, making them a great retirement savings option, too.

    Health reimbursement accounts (HRAs) are another potential savings option that can be tied to an HDHP. These accounts are similar to HSAs, except employers make the contributions instead of employees.

    Choose the Right Type of Health Insurance for Your Small Business

    It can be difficult to find the right group health insurance plan for your budget. Balancing benefits administration and budget can be overwhelming for anyone without a strong grasp of the healthcare system. 

    That’s why many small business owners work with a Professional Employer Organization (PEO) to help weigh their group health insurance options and handle the administrative burden of healthcare coverage. Contact GMS today to talk to one of our experts about how we can help you offer quality healthcare plans that work with your budget.

  • While businesses with fewer than 50 full-time equivalent employees aren’t required to provide health insurance to employees, it can certainly be a good idea to do so. 95 percent of HR professionals named health care benefits as one of the most important benefits businesses can offer, making it a powerful tool to attract and retain top talent.

    It’s not always easy to decide the best path forward when it comes to weighing health insurance options. Here are four different factors you need to consider when comparing health insurance options for your business.

    A woman stacking health insurance options for a small business.

    Individual vs. Group Health Insurance Plans

    The first consideration you need to make is simple: do you offer health insurance or not? This scenario breaks down to whether you want employees to purchase health insurance for themselves or if you want to offer a group health insurance plan. 

    The difference between individual and group health plans

    While you may not need to offer health insurance, the Affordable Care Act (ACA) mandates that Americans have it. If you don’t offer health insurance, your employees will need to purchase an individual health insurance policy for them and their families. 

    A group health insurance plan allows businesses to provide coverage to a group of members, which is comprised of members of your organization and potentially their families. Businesses that do offer these plans must offer it to every full-time equivalent employee – you can’t pick and choose who gets coverage and who doesn’t. However, employees can choose to opt out to pursue an individual plan or join another plan if eligible.

    What makes the most sense for my business?

    This decision comes down to your employees and costs. While individual health insurance is the least costly route for employers, it comes with the caveat that nearly half of employees named health insurance as either a positive influence or the sole deciding factor in choosing their current job.  

    Meanwhile, group health insurance gives you and your employees benefits an individual plan would not. Individual plans have higher out-of-pocket limits. The Affordable Care Act caps these at $7,350, while individual limits could be as high as $10,000. In addition, the increased buying power of group plans can offer a higher-quality overall plan design than what you and your employees could get at the same cost in individual coverage.

    Some companies may be tempted to combat the lack of health insurance benefits by providing a bonus for employees to help pay their indiviual premiums. While this offers a level of financial support to employees, it is not viewed that way by other government and financial institutions and is strongly advised against. Group health plans allow employers and employees to pay premiums with pre-tax dollars. Anything spent on group healthcare costs is tax-deductible, whereas individual plans are not. 

    Another issue with individual plans is that renewals are typically high if you utilize the coverage at all. The size and health of a group affects health insurance premiums, potentially giving group health plans more stability than a plan built for one person or family. When you tie in the tax benefits, group plans often end up being more cost effective than individual plans, all while offering a key perk to new and existing employees. This makes group health plans a much more attractive long-term option for many small businesses.

    Plan Design

    Every health insurance plan can differ in terms of what is covered and you and your employees’ financial responsibilities for doctors’ visits and other medical costs. When comparing plan design, there are two different routes you can go: 

    • Traditional plans
    • High deductible health plans (HDHP)

    The differences between traditional and high deductible health plans

    A traditional plan operates on a system with copayments (also called copays) and deductibles. The plan helps you and your employees pay for doctor’s visits, prescriptions, and other in-network medical costs. Meanwhile, group members are responsible for paying any copays, coinsurance, and deductibles associated with your specific plan. Once an individual has met their deductible, that person is typically only responsible for coinsurance payments up to the listed out-of-pocket maximum.

    An HDHP also has deductibles, but no copays involved. With these plans, individuals must meet a higher deductible before insurance pays its share of in-network medical costs. However, HDHP plans are eligible for a health savings account (HSA). Employees can use an HSA to set aside money from their paychecks and pay medical costs with tax-free dollars. 

    What plan design makes the most sense for my business?

    Of the two options, most people are more familiar with traditional plans – HDHP designs are a newer design that started with the Affordable Care Act. Because of this, some employees may be more comfortable with traditional copay plans due to familiarity and the lower deductibles.

    While newer, HDHP designs open both employers and employees up to lower premiums and potential tax savings through the HSA. In fact, HDHPs are sometimes called HSA plans because of this particular advantage. Some employers even choose to contribute to employees’ HSAs – this gives employees some funds to pay medical bills while allowing employers to receive the tax benefit.

    Both plan designs offer certain advantages, so your decision comes down to costs and comfort level. People who are used to having copays will often prefer traditional plans. Meanwhile, others may realize the benefits of an HSA with some education around how HDHPs help them. Take some time to estimate how your employees would use the plan and what you and your employees need when it comes to healthcare coverage. 

    Health Insurance Network

    When comparing health insurance, you also need to weigh how much freedom you need when it comes to which facilities, providers, and suppliers are available to you and your employees. A health insurance network is the group of medical care providers that have a contract with your plan. There are three levels of health insurance networks:

    • Preferred provider organization (PPO)
    • Exclusive provider organization (EPO)
    • Health maintenance organization (HMO)

    The differences between PPO, EPO, and HMO networks

    A PPO network does not limit you in terms of medical facilities or caregivers as long as you’re with an in-network provider. In this type of network, you won’t need your primary care physician to refer you to another specialist or other provider outside of your network – you can simply go see that person for an additional out-of-network cost. 

    An EPO network adds some additional limitations to this process. A typical EPO may limit your group members to one major hospital network in your region, except in the case of an emergency. Essentially, that group of doctors negotiated a contract to be the exclusive providers for that network. As such, you’re limited to that hospital network and may need referrals to see outside providers. 

    An HMO network limits in-network care to a specific location. Some HMOs require employees to live or work in a certain service area for coverage and can range from specific hospitals to a broader circle of locations and providers. People with an HMO network will need referrals to see any specialists or other providers outside your primary care or emergency room needs. 

    What health insurance network makes the most sense for my business?

    Your choice of health insurance network comes down to desired flexibility and nationwide accessibility. PPOs offer the greatest amount of freedom in terms of access, whereas HMOs offer the least. An HMO may work for a small business where everyone is located in the same small area, but it’s likely not an option if your employees are spread out. 

    You also need to consider what happens if you ever leave a certain area. With an EPO or HMO, you may not have coverage options if you go on vacation or have college-age children in different areas. For that reason, PPO networks tend to be more popular with employees.

    Healthcare Administration

    If you do decide to offer health insurance, you’ll need to consider how to handle the benefits administration process. A business can turn to a broker for group health insurance or find an organization like a PEO that can manage both benefits and payroll administration.

    The difference between administrative options

    If you opt for a broker that can’t manage payroll, that will place the responsibility of benefits administration in your hands. This means that you or someone else at your company would need to administer your plan, handle adding new hires to the plan, and manage the renewal process.

    If an employer goes with a broker that also houses payroll, everything would be done for them and automated so that they didn’t have to administer the plan themselves. This type of relationship offers you full administrative management and support for new hires, compliance tracking, and reporting.

    What makes the most sense for my business?

    It depends on how much time and expertise you have. Benefits administration is a major endeavor for a small business. Not only do you need to oversee benefits administration, but also key aspects of payroll management for your small business. You can opt to hire someone internally to oversee these responsibilities, but that does require increasing payroll for administrative efforts.

    Meanwhile, an organization like a PEO is a natural fit for health insurance administration. A PEO can offer you greater buying power and educate employees about how your plan works, your network, and ways to keep premiums down. It also gives you and your employees experts to talk to whenever there’s a question.

    Ready to offer a competitive benefits package without taking on the administrative burden? Contact GMS today to find out how we can quality group health insurance at a lower cost.