Saturday, September 1, 2007

Employee health insurance

In the last fifteen years, there has been a dramatic shift in employee health insurance. Increased options and cost savings for employers have led the shift away from traditional plans and towards HMO and PPO alternatives.


The biggest advantage of traditional employee health insurance is flexibility: employees can visit any doctor or hospital they want. However they are more expensive for both employers and employees, and few companies even offer traditional health insurance any more.


Health maintenance organizations (HMOs) have the lowest premiums of any type of employee health insurance. However, they’re also the least flexible type of health care plan: they require members to choose a primary care physician and get referrals to visit other physicians.

While this structure helps minimize costs for employers, it can be unpopular with some employees who currently use doctors outside the HMO network, since they must switch physicians to receive coverage. Also, employees who want more control over their medical care can find it annoying to jump through the gatekeeper hoop to see specialists.


Preferred provider organizations (PPOs) and point of service (POS) are two popular choices for employee health insurance. A PPO is a collection of physicians and hospitals that agree to provide health care at a reduced cost to PPO members. In a POS, employees choose a primary care physician who will provide referrals when needed.

With this setup, these employee health insurance plans can limit health care costs without the restrictions of an HMO.

For visits to doctors and hospitals that are affiliated with the PPO or referred by the POS primary care physician, patients pay a low deductible and little or no co-insurance. Visits to doctors and hospitals outside the network are not as fully covered. This increased cost typically involves deductibles and coinsurance, much like traditional fee-for-service plans.

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