A majority of companies choose to offer their employees health insurance through health insurers. Health insurers offer options referred to as managed care plans. These managed care plans offer a variety of services such as physician office visits, emergency care, prescription drug coverage and more. Payments are based on whether the member uses a service that’s covered by the network and what type of managed care plan they have. There are three basic types.
HMOThe most basic and inexpensive of health insurance plans, an HMO, or health maintenance organization, gives its members basic healthcare coverage. HMOs are the starter plans. Many small businesses offer HMO coverage to employees because of its relative affordability.[p] Members of this plan must choose a primary care physician (PCP) to take care of all their basic needs. The PCP coordinates the member’s care and provides referrals for specialists. Members have to choose doctors inside their health plan’s network or they will end up paying the full amount of the office visit.
POSA POS, or point of service plan, is slightly more comprehensive than an HMO plan. Some companies that offer HMO will offer a POS if they know many employees see physicians outside of the health plan’s network.[P] With a POS plan, health plan members still have to see a PCP to coordinate their care and are dependent upon them for referrals. Unlike an HMO, health plan members can seek care outside of the plan’s network. If a member chooses to see a provider outside of the network, the individual will pay more than the in-network copay; however, that person will still pay less than if s/he had seen that provider while on the HMO plan.
PPOThe most comprehensive plan, a PPO, or preferred provider organization, gives members the freedom that HMO and POS plans restrict. Since they are so comprehensive, they can also be cost prohibitive to smaller businesses.[P] PPO members do not necessarily have to choose a PCP. Members can seek services both in and outside of the health plan network, though like the POS plan, higher payments apply to out-of-network services. Yet unlike the POS plan, members can see a physician or specialist without a referral.