San Francisco-based business owners may balk at offering their employees health insurance because of the impact it would have on their bottom lines. However, there’s plenty of evidence to suggest that employees with health benefits are more productive and more satisfied with their jobs. For founders, that means higher profitability and greater retention rates.
Before selecting a health care plan that best suits their companies’ needs, however, owners need to know the differences between the most common types of healthcare insurance providers: HMOs and PPOs.
What Are HMOs?
Health maintenance organizations (HMOs) are medical insurance groups that manage health care for their members. They require members to select their primary care physician (PCP) from within their network who will handle the members’ regular medical needs, such as health checkups, prescriptions, and referrals to specialists as needed.
In an instance where an HMO policy holder visits their specialist without their PCP’s referral or receives treatment from a physician or at a medical facility that is not within the HMO’s network, the incurred healthcare costs are usually the responsibility of the policy holder.
What Are PPOs?
Preferred provider organizations (PPOs) are similar to HMOs in that they provide managed health care for their members, but they don’t require the selection of a PCP. As such, PPO members don’t have to get prior approval before consulting with specialists. While they maintain a network of doctors and medical facilities, the members that seek care out-of-network can still have some of their medical costs covered. However, seeking treatment within a PPOs’ network is generally less expensive for policy holders.
Another important difference between HMOs and PPOs is that with HMOs, policy holders make monthly payments to maintain coverage. With PPOs, however, members are billed for medical services on a case-by-case basis.
Which Type of Health Insurance Provider Should You Choose?
The question of whether to purchase a healthcare plan from an HMO or PPO will vary. However, it’s a good idea for business owners to discuss the two plan types with their employees before making their decision. If the majority of your team receives their medical care from a family doctor they’ve had for years, they may be wary of joining an HMO that forces them to get a new PCP.
Conversely, if your workforce is made up of younger, single employees with few ongoing medical issues, the potentially lower out-of-pocket costs offered by PPOs might make that option more appealing.
At the end of the day, employers receive the greatest benefit from offering an employee health care plan when best suits their staffs’ diverse needs.
Canopy Health is a community of caregivers creating an integrated healthcare experience where quality care and coverage are provided by an alliance of top caregivers throughout the Bay Area. They offer refreshingly clear, human care that is achieved by making each unique member’s journey predictable, transparent, and cost-effective.
For more tips and inspiration for small business owners, visit CBS Small Business Pulse San Francisco.