Group health insurance is a type of health insurance that provides coverage to members of a business, association or union. These plans typically have lower costs than individual plans, because risk is spread across the insured population.
Most small businesses are eligible to offer a group plan as part of their benefits package. It's a smart move for employers, as it shows their employees that they care about their health and wellness.
Health Maintenance Organization (HMO) Plans
HMOs are a type of group health insurance plan that works with a network of healthcare providers. These networks typically offer lower rates than traditional health insurance plans.
In exchange for the lower rates, patients must pay a deductible and copayments on covered services. The copayments are generally low, but may increase for emergency care or specialized treatments.
Some HMOs also require patients to get a referral from their primary care physician before seeing a specialist, and a limited number of providers may be available to them.
HMOs are a popular choice among those who do not expect to see specialists often and prefer working with their primary care physician. However, they don't provide the flexibility that some people prefer in a healthcare plan.
Preferred Provider Organization (PPO) Plans
Preferred Provider Organization (PPO) plans are one of the most popular types of managed care health insurance. They offer some of the cost-saving features of an HMO while also giving you more flexibility.
With a PPO, you pay less for healthcare services if you use doctors and other medical professionals in the plan’s network. You can also go to out-of-network providers for care, but you’ll usually pay a higher cost.
Another benefit of PPOs is that they don’t require a referral from a primary care doctor, which can save you time and money in some cases. However, they do tend to be more expensive than other types of plans, especially when you factor in deductibles and copays.
High Deductible Health Plan (HDHP)
High Deductible Health Plans (HDHPs) are popular among employees because they come with lower premiums than other types of insurance. They also offer a savings option in the form of a Health Savings Account (HSA).
Employees are typically eligible for an HDHP through their employer or through the government health care exchange. However, employees can purchase an HDHP through private health insurers as well.
Generally speaking, an HDHP makes sense for people who are in good health and who don't need to see a medical provider or take prescription medication very often. This type of plan isn't appropriate for those who expect to encounter significant healthcare expenses or whose life events (like getting married or having a baby) might increase their need for healthcare.
High deductible plans also encourage consumers to shop for preventive care services, which can save them money. But a recent study by the National Bureau of Economic Research found that enrollees in HDHPs tend to not shop for or use preventive services as much as they should.
Health Savings Account (HSA)
HSA plans offer tax advantages to help you save for your future health care costs. Funds grow tax-free and withdrawals for qualified medical expenses are also tax-free.
To be eligible for an HSA, you must be enrolled in a high deductible health plan, or HDHP, and have an income that doesn't qualify you for Medicare. These plans must have a minimum deductible of $1,400 for an individual or $2,800 for a family in 2022 and maximum out-of-pocket spending of $7,050 for an individual or $14,100 for a family in 2022.
In some cases, your employer may contribute money to your HSA through payroll deductions. You can also make a voluntary, tax-free contribution to your account.
An HSA is a powerful tool for helping you save money for your future health care needs, and it's easy to use. You can deposit money into an HSA through your employer, or by yourself, and you can withdraw it for qualified medical expenses — all tax-free.