The Different Types of Group Health Insurance Plans
As a current or potential plan sponsor, you need to know which group health insurance plan is right for your business. Learning the different types of plans is the place to start. Here's an overview of some of the most common:
Preferred provider organization
A PPO has a large network of participating physicians and hospitals that policy members can choose from. They can go to providers inside or outside the network, but if they choose the latter, the copays and service costs are higher, and a separate out-of-network deductible may apply. Members do not have to select a primary care physician from within the PPO network.
According to a study by the Society for Human Resource Management, 84% of surveyed employers offered a PPO plan in 2018, making it the most popular type of group health insurance plan.
Health maintenance organization
With an HMO, policy members are restricted to the providers within the HMO network and are usually required to select an in-network PCP. On the bright side, these plans usually come with no deductibles and lower out-of-pocket expenses.
Per the SHRM study, 35% of surveyed employers offered an HMO plan in 2018.
Point of service
A POS is a hybrid of an HMO and a PPO plan. Policy members can access providers from inside or outside the network, but if they want a higher level of coverage and fewer service costs, they must stay within the network.
The SHRM study states that 17% of surveyed employers provided a POS plan in 2018.
Consumer-directed health care plan
With a CDHP, employees combine a high-deductible plan for big-ticket items with a tax-advantage spending account, such as a health savings account or a health reimbursement arrangement. The key advantage is lower monthly premiums. Employers usually provide the CDHP as an option, alongside their PPO or HMO plans.
According to the SHRM study, 40% of employers offered CDHPs in 2018.
Exclusive provider organization
Members of an EPO must stick to providers who are within the network. If they visit an out-of-network provider, the services will typically not be covered. While EPOs usually have lower monthly premiums than PPOs and HMOs, the network tends to be more limited.
Per SHRM, 7% of surveyed employers offered EPO plans in 2018.
Other plans that might pique your interest:
- Indemnity, or fee-for-service, plan. Members can visit any health care provider. Offered by 4% of employers in 2018.
- Full-replacement CDHP. Removes all other group health insurance plan options, serving as the only choice. Offered by 3% of employers.
- Mini-med health plan. Provides minimal benefits and coverage. Monthly premiums are very cheap. Offered by 2% of employers.