Small Business

Plan Types for Small Business Health Insurance

Updated on December 09, 2019


Learn about the top plan types for small business health insurance

When looking at small business health insurance, you can choose from a variety of plan types, including PPOs, HMOs, EPOs, and HSAs. Choosing the right plan for your business and employees will depend on your cost and coverage preferences, and it is important to know what your options are. Learn more about the different plan types for small business health insurance.

What is an HMO plan?

HMO stands for “Health Maintenance Organization.” For small business health insurance, an HMO plan is based on each employee choosing a primary care physician to provide the majority of their health care needs. The primary care doctor coordinates health services within the specific contracted network of the HMO. Your employees might choose an HMO due to the plan’s lower monthly premiums and out-of-pocket costs, as well as the plan’s typically straightforward procedures, since HMO members usually do not have to file claims.

As a highly centralized plan type, HMOs are not as flexible as other plans, and employees will require referrals from their primary care physician if they need to see a specialist. As a type of small business health insurance, an HMO plan is a practical and convenient option for your company to consider if you want your employees to save on health care costs.

What is a PPO plan?

PPO stands for “Preferred Provider Organization.” A PPO plan allows employees to have greater flexibility when choosing their health care services, since PPO members can see doctors outside of their network and do not have to select a primary care physician to coordinate their care. With PPOs, employees can visit any doctor within the network at any time, and do not require referrals in order to see specialists, whom they can visit directly. However, the trade-off for being able to choose from a wider variety of health care options is the cost of having to pay more for using health care services outside of the network.

Employees have to pay higher premiums and out-of-pocket costs with PPOs, and will generally have more paperwork. As a plan type, PPOs may be the right small business health insurance for your company if offering employees more freedom to choose their own doctors is a greater priority than cost.

What is an EPO plan?

EPO stands for “Exclusive Provider Organization.” As a small business health insurance plan type, an EPO allows employees to use all health care providers and specialists without referrals, but typically does not provide out-of-network coverage. Also, EPOs do not require members to choose a primary care physician to coordinate their health care, and EPO plans generally cost less than HMO and PPO plans. For small businesses with employees who want to save money and do not expect needing much medical care, an EPO could be an optimal choice of health insurance plan.

What is an HSA plan?

HSA stands for “Health Savings Account,” which is a specially designated account meant to be used with high-deductible health insurance plans. Members save pre-tax money in an HSA in order to spend the funds on future health care expenses. Every year, money left in the tax-advantaged HSA rolls over and can earn interest. Ultimately, when a qualifying high-deductible health plan is used with an HSA, members can save on medical costs and receive a tax write-off.

HSAs may be appealing to employees if they visit the doctor infrequently and prioritize cheaper monthly premiums, despite having a higher annual deductible if they become ill or injured. Employees own their HSA account, and can carry their funds with them if they change jobs. HSAs may be an effective small business health insurance plan type for your company if your business has relatively young and healthy employees who prefer low costs.

What is a POS plan?

POS stands for “Point of Service.” POS plans are a popular choice of small business health insurance and are essentially a combination of the features in HMO and PPO plans. Like an HMO, employees enrolled in a POS plan need to choose a primary care physician who will provide them with all specialist referrals within their insurance company-approved network.

Like a PPO, a POS plan usually provides access to a wider range of health care providers than HMO coverage. Receiving care outside of the network could lead to more out-of-pocket expenses, or might not be covered at all.

Choosing a small business health insurance plan type

Overall, the right type of health insurance plan for your small business will depend on your cost and coverage preferences. You can also offer multiple plan types to your employees. eHealth’s licensed insurance agents can help you choose the most affordable and effective small business health insurance plan for you and your company.

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