Selecting the right employer-sponsored health care plan for you can be trickier than the fast-talking salesperson at the mobile phone store or the up-charge attempts at the oil change place.
It doesn’t, however, need to be confusing, and we’re about to explain why.
Not all employers even offer health care plans, so if you have one that does, you’re fortunate. But when it comes time to sit down with your company’s human resources representatives about PPOs, HMOs and EPOs, the language and structure of each can be a lot to digest.
How Different Plans Work
Blue Cross Blue Shield (BCBS) is one of the top health insurers in the nation, with more than 106 million people covered under their plans. Headquartered in Chicago, BCBS provides health insurance to members in all 50 states.
Information found at the BCBS website clearly breaks down the types of coverage an employer might offer and how they work. There are health maintenance organizations (HMOs), preferred provider plans (PPOs) and exclusive provider organizations (EPO). So, which one is right for you? Here’s a look at how they work:
- You pick one primary care physician, and all health care services go through that specific doctor
- If you need to see a different doctor or specialist, you need a referral from your primary physician
- If you visit doctors outside of your HMO, there’s a good chance you’ll be paying out of pocket for services
- Women typically don’t need a referral for obstetricians/gynecologists in their network for routine services
- Costs are typically lower than a PPO
- You have greater flexibility in selecting physicians
- You can see any doctor without a referral, be it in or out of your network; this flexibility, however, will cost you a little more
- Staying within the network means smaller copays and full coverage
- Combines a bit of both worlds, with the flexibility of most PPO plans without the higher cost
- There’s no need to select a primary care physician, and you don’t require referrals to see other specialists
- One caveat with an EPO is that the network of doctors you can choose from will be limited, and the plan doesn’t cover care outside of your network, unless it’s a trip to the emergency room
Generally, insurance companies view a group of employees as a lower risk than individuals, and maintaining a large group of lower-risk employees protects insurance companies from losing money. A lower risk for the insurance company translates to lower costs for you.
The choice between PPOs, HMOs and EPOs is really up to you. If you don’t mind spending a bit more out of pocket for the ability to see any physician you want, then a PPO might be the way to go. If you want to save money and don’t mind the limitations of an HMO, that’s a plan that could work for you. If you don’t mind a little bit of both, ask your HR contact person about an EPO.
Other Options Do Exist
Another perk some employers offer is a health savings account (HSA). This is available to employees who are enrolled only in a high deductible health plan (HDHP). HDHP plans generally come with a lower monthly premium but include a higher deductible, meaning you pay more out of pocket for services before insurance starts to cover you.
If you’re enrolled in an HDHP, you might be eligible for an HSA, which is a savings account tied to your health care plan. You can deposit pre-taxed money from your paycheck into a special account that can be used for paying deductibles, medical expenses and prescriptions.
Robert Leone, a senior lecturer at the University of Minnesota’s Carlson School of Management, is an expert in, among other fields, employee benefit plans. He has instructed graduate-level classes on employee benefits within the school’s human resources master’s degree program since 2012.
Leone said most of his graduate students will go on to work in a human resources capacity in myriad fields – corporate and otherwise. He is confident they leave the program prepared to clarify the sometimes-complicated network of employer benefits to an uninitiated new employee.
“We try to prepare the student to address health coverage questions from future employees by helping those individuals and counseling others who will come in seeking advice,” said Leone. “We start with the basic standpoint of how coverage works with multiple-payer systems and from there, help them understand basic fundamentals on how managed care networks work.”
By the time U-M students end up in their professional human resources role, with a little on-the-job seasoning, they are ready and knowledgeable to provide expert-level clarity to employees on what benefits are available to them and how they work.
“Any student coming out should be able to describe it in layman’s terms,” Leone said. “I confess even now, I still go through open enrollment every year as a retiree. I’m as familiar with this as anybody, and even I still don’t like it.”
Leone said a major concern is that he – and many other people – have no idea what their health needs will be in a 12-month window into the future.
With PPOs, HMOs, EPOs and HSAs, a decision is just short of rolling the proverbial dice.
“It’s complicated and there really isn’t a right answer,” Leone said. “You make your best educated guess.”
Leone added that employees – prospective or otherwise – can glean a great amount of information from company websites and their health coverage content.
What’s been your experience with employer-sponsored health care plans? Please leave your comments below. And don’t forget to subscribe to the Zing Blog for a wealth of great articles on money, home and life.
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