Group Health Insurance

Of the U.S. citizens who have health coverage, the vast majority – nearly 60 percent – secure that coverage through group health insurance, and then – typically – through an employer-sponsored health plan. Even while employer-sponsored coverage has been declining – down from 64.2 percent in 2000 – millions continue to take advantage of the coverage for reasons that are easy to understand:

Costs

First, the employer typically takes responsibility for a significant portion of the health care expenses. A recent Kaiser Family Foundation survey of employers survey of employers found that in 2008, premiums for employer-sponsored health insurance climbed to $12,608 a year for family coverage. Of premium costs, employees paid less than a third – or about $3,354 – from their paychecks.

Ease of enrollment

And while cost is appealing, enrollment is perhaps even more appealing. Group health plans are guaranteed issue, meaning that the insurance company must cover all applicants whose employment qualifies them for coverage – and can’t rate up increase the cost for an applicant with a pre-existing condition.

Note: Nearly a dozen states have a provision for the self-employed to qualify as a “group-of-one,” meaning that they, too can purchase a guaranteed-issue plan.

The reason: In a group plan, the risk is spread across all the participants in the group. In smaller groups, where the risk is more thinly spread, a serious illness to one employee can make the entire group more expensive to insure.

Options

Because large groups can use their size to negotiate better benefits, employer-sponsored plans typically are able to include a range of plan options. In addition to an HMO or PPO plan, employees may have the option to purchase insurance for dental, life, short- and long-term disability.

To be enrolled or not to be enrolled

Do most employees enroll in available plans? As with any health plan, higher premiums result in lower enrollment. But before opting out of an employer-sponsored plan, remember that it’s essential that you have health insurance for you and your family. More than 60 percent of bankruptcies in the United States are the result of medical bills. In addition, over a recent six-year period, an estimated 137,000 Americans died due to a lack of health insurance. They either received too little care or received that care too late.

What happens if you lose your job?

If you lose your job, an obvious option will be COBRA. The Congressional Omnibus Budget Reconciliation Act of 1985 allows laid-off workers to continue to purchase the health coverage from their employer-sponsored plans for a defined period – typically 18 to 36 months – after they leave their employers.

HMO vs. PPO

HMO

HMO stands for health maintenance organization. While HMOs have been much maligned over they years, they are in fact a great and affordable way to provide health insurance for you and your family. In reality, HMOs provide you with the most comprehensive coverage at the most affordable rates, especially when compared with other private health insurance options.

Usually HMO plans are very structured and have specific coverage networks, often housed “under one roof”. But whether they work in the same building or not -all health care requested under the plan will need to be provided only by the HMO network of doctors, hospitals, and specialists.

How does an HMO work?

With an HMO healthcare plan, you are required to make a fixed monthly payment. This premium acts as a kind of pre- payment for medical services. Within some HMO plans and for some services, there might be co-payments required which need to be paid at the time the services are being provided.
Typically, in an HMO your monthly premiums will not increase during the term the policy is in effect.

Types of HMOs available

Most HMO plans function in the same way regarding the delivery of patient care. The differences are based on structure and composition of their service network:

Staff Model

In this type of HMO, there are a number of specialists who are hired and work at an HMO building. Staff model programs tend to be a little bit more restrictive than the other types of HMOs for both patients and doctors because doctors can only treat the HMO members and the insured can only go to these specialists.

Group Model

Also known as closed panel, this type of plan tends to work a little bit differently because the HMO pays a group of physicians to become their network. Patients under that HMO can only use this group of physicians and the group decides how to distribute the money the HMO pays among them.

Open-panel model:

This type of plan allows individual physicians to participate in HMO programs through independent practice associations that way physicians are able to also treat patients who are not enrolled in HMO programs and are not committed to taking patients just because they are enrolled in an HMO program, providing physicians with a lot more options.

Benefits offered by HMO plans

As mentioned before, these plans offer the most comprehensive level of coverage at the most affordable price. Besides this great advantage there are several other benefits to HMOs such as:

  • Affordable out-of pocket costs: HMO members are required to make a fixed monthly payment regardless of how much medical care they are going to need, in contrast with other types of health insurance that charge a percentage of each medical service provided to you.
  • HMO plans focus on the well-being and preventive care of their insured members. They encourage insured members to practice wellness and preventive medicine. In some cases HMOs offer free health screenings, health educational classes, and discounted health club memberships.
  • HMO health plans do not have any limits on lifetime benefit pay-outs, other types of health insurance often do.

Disadvantages of HMO plans

Although there are many advantages offered by HMO plans, there are some disadvantages that need to be taken into consideration before deciding to participate in one, such as:

  • Limited Network and PCP requirement: these plans tend to be very strict when it comes to specialists you are able to visit. As an individual enrolled in a HMO program you are required to chose a primary care physician (PCP) who is in charge of your general medical care. In case of a medical emergency, or if you feel you need a specialist, your primary care physician must be consulted.

If you are interested in getting services from physicians who are not enrolled in the HMO program, most insurance companies do not cover it. Typically, the HMO plans will not pay for non-emergency care provided by a non-HMO physician. However there are certain types of HMO plans that do allow you to go out of network, for a fee.

PPO

PPO stands for Preferred Provider Organization, which is a type of managed organization that can be defined as a system of health care providers, or a network that has been set-up and organized by the health insurance company.
Typically the practitioners who provide medical services to insured members sign a contract with the PPO system. These doctors, clinics, hospitals, and specialists have agreed with the PPOs schedules and guidelines to serve the insured members.

Advantages of PPO plans

There are many advantages when it comes to PPO plans. For example, you have more flexibility when choosing a physician in contrast with an HMO plan, which tends to be very strict regarding choice. With a PPO healthcare plan you are also able to go to a doctor who is out-of your network and still be somewhat covered. You will most likely have to pay a co-insurance fee to see “out of network” doctors, but still you are entitled to do so.
Another advantage of PPO plans is that you do not need to choose a Primary Care Provider or referring physician. This means that if you are interested in going to certain specialist, you may do so.
The out-of-pocket costs per year in a PPO healthcare plan are limited, which can be really beneficial; that way you will be completely aware of the cost per year for medical expenses.

PPO Plans Disadvantages

Although there are many benefits to a PPO healthcare plan there are also some disadvantages you should consider before purchasing PPO plans. For example:
PPO plans tend to be a little bit more expensive than the other managed care plans. This is mainly because of the flexibility provided by these plans.
The deductibles and premiums of these plans tend to be higher than some of the other managed care organizations. As mentioned before, this is due to the flexibility and comprehensiveness of PPO plans.

Different types of PPOs

There are different types of PPO plans you can choose from. Some of the options are:

  • PPO basic plan: as the name implies, this plan offers the most basic coverage. The rates are lower on a basic plan, because they carry a higher co-payment and deductibles.  However if you are basically healthy, and have a healthy family, this is a great option as the times you will have to use the plan and pay the co-payment will likely be few.
  • PPO standard plan: A standard PPO plan has a higher level of coverage in contrast with the basic plan, but is typically more expensive.

How much will it cost me?

PPO programs tend to be the most expensive type of managed care health plan. This is mainly because these plans tend to have a really comprehensive level of coverage; along with a lot of flexibility and choice when it comes to seeing doctors. The costs that tend to increase your premium are co-insurance payments. It’s important to keep in mind that these costs can vary based on whether you are using network providers or if you are using non-network providers. You can reduce costs by staying in network.

Aspects to consider before purchasing a PPO healthcare plan

There are several aspects you should consider before purchasing a PPO healthcare plan. Knowing your options will make it easier for you to choose the best health insurance for you and your family. You should be aware of all the terms, rules, benefits and disadvantages of any healthcare plan you are considering.
Here are some of the things to think about before making any decision.

  • Can I go to a specialist if I need it?
  • Is preventive care provided within the program?
  • What are the limits and terms of medical treatments and services?
  • How much is the premium and what services are rendered for the premiums?
  • What rates are charged if I want to use a non-network doctor or physician?
  • Is there an out of pocket maximum?
  • Is there any specific location like offices or hospitals where I can go?
  • What specialists, doctors and hospitals are available through the plan?
 

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