The ABCs of plan types
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The most popular health plan design offered by midsize U.S. employers is the preferred provider organization, offered by 47% of the employers in a survey by Indianapolis-based United Benefit Advisors L.L.C., an alliance of more than 140 independent benefit advisory firms.
The consumer-driven health plan is the second-most popular plan design, offered by 22% of the 12,000 middle-market employers included in the 2012 UBA Health Plan Survey, followed by the health maintenance organization (19%). Other plan types offered by middle-market employers include the point-of-service plan (10%), and the exclusive provider organization (2%).
Descriptions of various health plan types:
• PPO: A plan that provides coverage via a network of selected health care providers that are under contract to offer discounted fees for services. Plan members may seek care from providers outside of the network but would incur larger costs in the form of higher deductibles, higher coinsurance rates or nondiscounted charges.
• CDHP: A plan with a large deductible that usually includes either a health reimbursement arrangement or a health savings account to cover the cost of care provided within that deductible. HRAs are funded by employers, while HSAs can be financed by employees only or by a combination of contributions from employers and employees.
• HMO: A plan that restricts access by providing coverage only for care administered by network providers. In some cases, limited out-of-network coverage is provided, usually in cases of emergency or when no network providers are available at the time that care is needed.
• POS: A plan similar to a PPO that allows employees to decide at the time of service whether to use an in- or out-of-network provider, though cost of non-network providers is almost always higher.
• EPO: A plan similar to an HMO that covers only care provided by in-network providers, with few out-of-network benefits.
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