Not all small business owners have health insurance policies of any type for their employees, so if you’re considering purchasing a policy for your business, your employees can count themselves among the lucky ones. However, there are not-so-subtle differences among managed health care plan types, and those differences will equally impact business owners and their employees.
Two of the most common types of managed health care plans are health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Each of these small business employee health insurance coverage types have their own strengths and weaknesses, and there are several factors for the business owner to consider. The key factors are whether or not each of the types will be affordable for both the business and its employees, and whether or not an HMO will be uncomfortably restrictive.
HMOs are the more affordable option, but less flexible. As a member of an HMO, a business’ employees must choose a primary health physician from a list of doctors within a specified network. The employees must then visit that physician for all health concerns, and if they should need specialist care, they must be referred by their primary physician. There are also strict limitations on emergency care. On the other hand, premiums and co-pays are extremely low, and all of the paperwork is taken care of within the HMO.
PPOs are similar in that they also have a network of approved physicians, but employees have the freedom to obtain coverage while visiting outside physicians. In these cases, deductibles may apply and co-pay costs will be higher. They will also have to handle related paperwork themselves if they choose to seek care from outside of the network. The overall premium rates will likewise be higher.
Some employee groups will be willing to pay more for their freedom to choose their own doctors, others will have more appreciation for the savings of an HMO. If you operate a very small business and are currently investigating these options, you may consider the opinions of your employees in the event your business could afford either option.
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