The major feature that differentiates group from individual plans is that in a group plan, you cannot be denied coverage. In a group, everyone is eligible.
The major group plans are set up with employers.
Over the last 20 years or so, there has been a shift from traditional major medical plans to managed care organizations such as Health Maintenance Organizations (HMO), Preferred Provider Organizations (POS) and Point of Service (POS) Options.
In fact, the usage statistics are as follows:
Conventional HMO PPO POS
1988 73% 16% 11% (na)
2007 3% 21% 57% 13%
Below are the features of these four plans:
Conventional
These are known as pay for service or major medical plans. The biggest advantage of these plans are that they allow covered individuals to visit any doctor or go to any hospital they want. They’ll receive coverage for any treatment covered under the policy.
Any specialist can be visited and the insurance company has no say whether the visit is necessary or not.
However, because of increasing costs (both to insured’s and insurers), these plans are slowly disappearing. These plans also carry high deductibles and coinsurance leaving the insured to pay a healthy amount for this coverage.
HMO’s
In this model a network of doctors and hospitals are created. The idea is to implement cost saving measures and improve efficiencies within the network. The premiums are usually the least for these types of plans.
However, HMO’s provide little flexibility in physician or hospital choice. The insured has to select a primary care physician (PCP). The insured goes to their PCP and gets health checkups. The PCP also approves visits to other doctors, if necessary.
If an employee wants to use a non-member doctor, they have to pay them directly.
PPO’s
PPO’s have become the most popular managed care plan over recent years. A PPO is a group of physicians and hospitals that agree to provide reduced cost health care to all members.
PPO’s are similar to conventional plans except that they have two coverage levels:
POS
These are a type of HMO. In fact, POS combines elements of each. As with an HMO, POS members choose a PCP, who will provide referrals when needed.
Like a PPO, members are free to visit out of network providers without a referral. At least some of the expenses will be covered it they do. However, they will pay more.
They’re popular because they have the cost savings of a HMO while allowing some flexibility in selecting providers.
Consumer Driven Health Plans (CDHC)
Not yet on the chart, these plans will be soon. They’re founded on the belief that the consumer needs to take an active role in managing their own health care costs.
An example of a plan like this is where a customer sets up an HSA (Health Savings Account) to save tax free money for everyday health care costs and buys a high deductible ($5,000 or more) policy to protect them in case of a catastrophe.
Expect CDHC’s to come on strong in the next 10 years.
Steve Wyrostek -MedicalInsurance.org Expert A 20 year plus veteran of the insurance industry, Steve managed departments in the personal and commercial lines areas of major insurers. He’s familiar with how insurance—ranging from boat to workers compensation—works.
