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Health Maintenance Organization (HMO) Preferred Provider Organizations (PPO) A PPO is a network plans designed to provide medical services at a discount to its members as an incentive to increase volume. PPOs provide flexibility and more choices to the employee, as a member may see any specialist within the network without referral requirements. Additionally, members have the option to go out of network at a reduced coverage level. Advantages: - Higher level of benefits - No referrals - No PCP - Provides flexibility - Members have some level of coverage outside of coverage area (travel) Point of Service (POS) A POS is a network plan with primary care physicians (PCP). The PCP acts as a gatekeeper for referrals to specialists. The member retains some coverage for services rendered that either are not authorized by their PCP or are delivered by non-participating providers. This coverage would be rendered at a level. A POS can be considered as hybrid between a PPO and an HMO because it is a managed care plan that gives the member the option to go out of network. Advantages: - Low out of pocket costs - Out of network option Health Savings Account (HSA) An HAS is a consumer-oriented, tax-advantaged savings accounts that are combined with compatible high-deductible health plans. These plans enable members to pay for uncovered expenses with balances accumulated in a tax-free interest earning individual bank account. Advantages: - Portable: never lose funds, save over lifetime; true cash account - Triple tax-free: no tax on deposit, no tax on interest, no tax on withdraw - Balances roll year after year - May be funded by employee and/or employer contributions - Employer contributions not required Health Reimbursement Arrangement (HRA) An HRA is a medical savings account that allows members to use funds provided by the employer to pay for eligible medical expenses. Each year, the employer makes a contribution toward the employee’s HRA. The employee then uses the money to pay the full or discounted cost of qualified services until the benefit year deductible is met or until the fund contributions have been exhausted, whichever is less. The HRA must be funded solely by the employer and cannot be funded by salary reduction. The plan may only provide benefits for qualified medical expenses. Advantages: - Employer’s allocations are pre-tax - Terminated employee balances go back to employer - Total costs, including full funding of deductible are usually less than premiums of traditional fully funded plan Self Insured Stop/Loss Coverage With self-funded plans, employers pay health care claims incurred by employees and their dependents, and purchase stop-loss insurance to cover claims that exceed a certain amount. Self-funded plans differ from commercial insurance in that employers don't pay monthly premiums for care employees might receive; they pay only to cover the care employees actually receive. For a company with a "reasonably healthy" work force, self-funded plans could cost up to 25 percent less than a traditionally funded plan. However, businesses need to be cautious that such plans are right for them. Advantages: - Increased flexibility in plan design - Potential to reduce total costs - Large claim risk may be off set by stop loss coverage - Premium tax not required |
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