Health Insurance Trends: PPOs, HMOs and HSAs
Small business owners often struggle to provide employee benefits like health insurance coverage to their employees. Understanding the options available and the trends in your region can help you choose the best health plan for your business and for your employees. Currently, employers have three basic options to choose from: PPOs, HMOs and HSAs.
Preferred Provider Organization (PPO)
Nationally, Preferred Provider Organizations are chosen by small businesses nearly twice as often as other insurance plans. PPOs cost a bit more because of their flexibility, but PPO enrollees can seek care from an out-of-network physician and still be covered. They can choose a specialist without a primary care physician referral and aren’t even required to have a primary care physician on record. However, patient out-of-pocket expenses are higher for out-of-network doctors.
In 2016 and 2017, enrollment in PPOs was 52% and 51% respectively for the western region of the United States.
Health Maintenance Organization (HMO)
Health Maintenance Organizations are more restrictive than PPO. For this reason, small business owners choose them less often than PPOs. While it tends to cost less, an HMO requires enrollees to select a Primary Care Physician (PCP) from their list of network providers. Visits to specialists are only covered when the patient is referred by their PCP to a specialist who is also in the network.
Nationally, enrollment in HMOs was 25% in 2016 and 26% in 2017. In the western states those numbers rose to 33% and 34% respectively.
Health Savings Accounts (HSA)
Health Savings Accounts are a viable option for employers who want to lower the cost of providing medical insurance. Employers pay less to provide a high deductible health plan which is HSA-eligible. Money is taken pre-tax from employee pay and deposited in the account to use in paying the higher deductible, coinsurance, and copayments. Because the money is untaxed, the employee receives additional savings.
In 2017 only 6% of employers nationally offered policies that qualified for HSAs. That number dropped to 5% for western states where HMOs remain popular.
Trends to Watch
While Health Savings Accounts are declining in attractiveness, Preferred Provider Organizations and Health Maintenance Organizations remain quite popular. Employers seem to prefer managed care over cost-sharing alternatives. It’s also important to note a trend among a significant number of employers in offering other types of coverage. For instance, some areas are seeing a rise in alternative health insurance solutions such as:
Exclusive Provider Organizations (EPOs)Localized NetworksConsumer-driven plansAccountable Care Organizations (ACOs)Hybrid plans
The world of employee benefits and health insurance is constantly changing, and it’s often difficult to keep up with those changes. Working with the qualified insurance professionals at Sackett and Associates ensures you’re getting the right coverage for your employees at the right price for your business. Call us today at 707-832-3689 or send us a message via our website. Be sure subscribe to our blog, like us on Facebook and find us on LinkedIn. Our agents are experienced in handling small business health insurance and welcome the opportunity to assist you with your insurance needs.
