How to Choose a HMO or PPO Group Insurance for a Small Company
Many companies opt to offer insurance to their employees as a benefit. For most businesses, health insurance is the second-largest expenditure in their budget, especially for a small company. Because of this, careful consideration and planning must go into the choice of medical coverage. If you are planning to provide health benefits to your employees, there are several things that need to be considered before selecting a plan for your business.
Educate yourself on the differences between a Health Maintenance Organization (HMO) and a Preferred Provider Organization (PPO). Briefly, an HMO requires a gatekeeper; meaning that members must receive a referral from a general practitioner in order to see a specialist. A PPO does not have a gatekeeper, so each member can choose any doctor he wants to see.
Determine the type of coverage to offer. Talk to your employees. Find out the types of coverage they need, and how much they are willing to contribute. Analyze your employees: Note if they are older or younger. Note if they are single or have families. Notice if the employees are healthy or have medical issues. Make a list of your findings.
Review insurance plans and rates online. Several websites allow you to identify and rank group health insurance plans. Plans can be ranked by state, costs and services offered. Sort results by plan needs as well.
Obtain bids from at least three companies. Contact companies that offer the services you are considering. Write a Request for Proposal (RFP), and send it to each company. Your RFP should include a price quote request and a request for network coverage information. Ask any plan and service questions you feel are relevant.
Select a group insurance plan. If possible, speak with each insurance company's references. Ask each group if they are happy with the company's customer service and claims departments, and with the benefits in general. It is better that the reference(s) be from a group similar in size to your own. Choose the plan that offers the best coverage for your budget.
- Choose a plan by state. If you have employees in more than one state, choose the state in which your company's headquarters resides.
- Keep in mind that there is more to a plan than its price. The most expensive plan is not always the best plan. Conversely, the least expensive plan is not always the worst plan.
- Pay close attention to the rate estimate for year two. Sometimes a company will offer you an "introductory" rate for the first year, and then raise the rates significantly for subsequent years.