Reader question:
What kinds of group health insurance are there?
Richard
Great question.
There are four kinds of group health insurance, although the most popular ones these days are the HMO and the PPO. There have been a lot of changes in employment based medical insurance in recent years, and the employee has come out the winner, with more and more benefits as well as lower premiums and better options than ever before.
- Traditional group health insurance.
In 1988, the majority (74%) of group health insurance was provided in the traditional way. Well, things have changed quite a bit, and as of 2003 that number has dropped to only 5%. The best thing about traditional group health insurance is that it has room to move around in. You can pick any doctor you want, go to any hospital you want, and see a specialist without having to get a referral, among more things. The main reason that you don’t see traditional group health insurance around anymore is because this amount of freedom meant high costs, both for company and employee.
- HMO group health insurance.
HMO means Health Maintenance Organization. This was the first group health insurance type to offer an option other than the traditional kind. This is the cheapest group health insurance option, but only because it has so many limits. A network of doctors and hospitals is created so that you can choose from among that list, and can only go anywhere outside of it and still be covered is if you get a referral from a doctor on the list. If you go to a doctor or hospital not in the network, you’ll be paying out of pocket.
- PPO group health insurance.
PPO means Preferred Provider Organization. This is the most oft-used type of group health insurance these days. It’s similar to both traditional and HMO group health insurance, because you can go within a network or outside. If you go within the network, then you’ll get very low prices and most often won’t have to co-pay anything. If you go outside, you’re still covered, it will only cost more, but still less than if you had no coverage.
- POS group health insurance.
POS means Point of Service, and is also called an open-ended HMO. This is very similar to PPO because there is a network of doctors which the insured must visit and get referrals before going outside the network if they want to be fully covered. They can still go outside the network without referrals, but it will cost them more, though they will still be covered.
Cheers,
Fashun Guadarrama.