Products

Health Maintenance Organization (HMO)

A health maintenance organization (HMO) is a type of managed care organization (MCO) that provides a form of healthcare coverage that is provided through hospitals, doctors, and other providers with which the HMO has a contract with. HMO covers only care rendered by those doctors and other professionals who have agreed to treat patients in accordance with the HMO's guidelines and restrictions in exchange for a steady stream of customers.

What does this mean for you?

HMO plans are restrictive in nature in nature and require referral from you primary care physician. Insurance carriers can provide a lower price for this type of plan on group health because they can control costs. They have predetermined rates with doctors and hospitals that have control expenses. To the consumer this means most services are a copay. It’s a simple pay for you, but there is no flexibility for self referring. HMOs are popular mostly in California and not offered in many states. If purchased in California you get no coverage in any other state (except emergency services). Take a look at a typical quote showing a summary of benefits and what you would have to pay for.

 

Preferred Provider Organization (PPO)

A Preferred Provider Organization (PPO) is an organization providing health care that gives economic incentives to the individual purchaser of a health-care contract to patronize certain physicians, laboratories, and hospitals which agree to supervision and reduced fees.

PPO plans are the most common plan nationwide. Every state offers some type of PPO coverage. This means that you can go to any doctor in network doctor nationwide and pay the same as if it was in your state. Typically larger the carrier, the larger the network. There is always a deductible and maximum out of pocket (OOP) for an individual or family. Typically the family deductible and OOP is twice as much as the individual. Take a look at typical quote that shows a summary of benefits.

 

Health Saving Account (HSA)

Consumer Driven Health Plans (CDHP): All carriers are promoting these plans and people are taking advantage of the savings. In general the purpose of the plan is to lower the monthly premium while protecting you from large medical expenses. Census found that as of Jan ’09 approximately 8 million Americans have enrolled in this “self directed plan”. This type of plan started in 2004-2005 and has increased in popularity ever since. This higher deductible plan coupled with and health savings account allows a person to save for future medical expenses while saving money on monthly premiums today. (attach both .pdfs called road rules) HSA plans have many pros and cons. The lower premiums come at other costs.

Advantages:
  1. Tax deductions and a way to make medical expenses tax free.
  2. The money you put in the account is rolled over, not like an FSA. Save for future medical expenses! If you change from an HSA approved plan you keep the money in your account you just can no longer contribute. Use the money latter while on an HMO, its up to you!
  3. Contribute towards your employee’s account and help them save while creating a payroll deduction!
  4. Preventive services like screening, well woman exams or regular checkups are “free”.
  5. Afford a health insurance plan when you couldn’t before. Premiums are the lowest of any other type of plan.
Disadvantages:
  1. The biggest disadvantage! Deductible may not be funded right away. If we are moving from another HMO plan employees are use to the copay plans. This means the upfront cost of service is a jump in a very cold pool. Many people rely on the copayment system to get through the month of medical expenses. If one looks at the budget for the year, the H S A makes sense. On a monthly bases without some funds available, many people see this as too risky. THE EMPLOYER HAS TO HELP to ensure employees get a head start. Employer can contribute savings from other plan premiums as an aid. As the H S A premiums go up, the employer can contribute less to even out the cost for the next 3 years!
  2. This is called consumer driven healthcare. This means you have to manage the HSA account and manage all the bills through this account. The HSA account must be separate from your personal account and designated by your bank as an HSA account. Expenses must be filed with the IRS when you do taxes.
  3. Some HSA banks charge to use the account, but they will invest your money like an IRA. You pick the profolio or how you want a return on your money within that account. Each bank has different thresholds at which they will start investing for you.
HSA Bank Resources:

    Warner Pacific, a General Agent, has a great list of the banks and Insurance carriers they are typically associated. The following link is what brokers like us use to help people find the right bank. Please take a look at the list and we hope this helps you. http://www.warnerpacific.com

    We have used HSAInsider as a great resource to help educate ourselves and clients on how HSAs work. If you want to see the page where we base a lot of our information please take a look at http://www.hsainsider.com

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