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Companies pay the health insurance of their employees in order to ensure the security of the workforce. There exist a number of reasons that companies should pay the health insurance of their employees (Leopold, 2010). Deciding when to pay the insurance is a simple task, but selecting which insurance option that best suits the company and its employees is a great challenge. This is due to the fact that there are a number of health insurance options among which employees are supposed to choose from. This paper therefore is aimed at helping Solar Solutions manufacturers to choose the best health insurance option for its employees. In order to achieve this, the paper will discuss various types of health insurance by seeking to understand the comparison between them and the benefits of each.
The two health insurance plans selected for Solar panels are Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Before deciding which health insurance plan that is best for this organization, it is necessary to conduct a detailed analysis of each by seeking to understand their benefits and disadvantages.
This type of health insurance plan offers administrative and cost sharing simplicity for patients. This is due to the fact that Health Maintenance organizations insurance has some restrictive rules imposed to determine which providers that patients should visit (ATWATER, 2013). People who use HMOs health insurance plan are entitled to medical treatment, preventive care and doctor visits from providers who are in the Health Maintenance Organizations network. People who participate in this type of insurance plan are usually required to pay a certain amount of fees that is referred to as copay (McCormick, 2002). This is an additional payment that is paid by a beneficiary of Health Maintenance Organizations insurance plan to the payment made by the insurer. It is also important to note that HMOs does not cover medical care that was not referred by a primary care doctor. They, in fact, require beneficiaries to choose a primary care physician who can refer them to a specialist (ATWATER, 2013).
Some advantages of this type of health insurance plan include the fact that HMOs does not require forms to see a doctor. In addition, HMOs enable patients to forecast their medical fees and to reduce the burden of paying it themselves (McCormick, 2002). The disadvantages of this plan include the fact that beneficiaries are stuck to a primary care physician and they do not have freedom of choice.
Preferred Provider Organizations (PPOs) is a type of a health insurance that compared to other types of health insurance plans offers a wide range of choices to beneficiaries. This means that patients are allowed to select providers of their choice (Bardey & Rochet, 2010). Beneficiaries of this type of insurance plan have the abilities to venture out of the network and the referral from the primary care physician is not necessary for this type of health insurance. PPO is usually used by small companies with employees responsible for at least 20% to 40 % of the in-network costs and out-of-network costs. The advantages of the PPOs are numerous but the most important include the freedom offered to members to select the provider of their choice. In addition, PPO does not require members to seek the referral from the primary care physician.
The difference between HMOs and PPOs can be viewed from their benefits and the advantages that they offer to their members. Therefore, in terms of the cost involved, HMOs is less expensive than PPOs (Bardey & Rochet, 2010). This is due to the fact that members are only required to pay as small amount of money and the premium paid is also reasonable. On the other hand, PPOs have higher costs and the premium prices are extremely high. Therefore, for companies that are intending to pay less, HMOs would the best choice. In terms of coverage and freedom, HMOs plan is somehow limited and does not offer sufficient freedom to its members (Bardey & Rochet, 2010). This can be characterized by how the beneficiaries are stuck to one primary care physician unlike in PPOs where patients are provided with the freedom to choose providers of their choice. In terms of coverage and flexibility, PPOs is miles ahead since it provides its members with a greater coverage.
CDHPs is another type of plan that enables members or beneficiaries to pay their routine medical bills and expenses through health reimbursement accounts and health savings accounts. The CDHPs plan consists of minimizing costs and expenses that members pay and to reduce the burden of medical bills. The patients under CDHC are likely to pay less on medical bills than others (Christianson, Parente, & Feldman, 2004). The key elements of Consumer-Driven Health Plans (CDHP) include the PPO that has low premium and high deductible premium. The consumer driven Health Plans also entails the special saving account. This account is intended to be used by members to pay their medical expenses before the deductible has been met. It is important to note that this account allows members and beneficiaries to put aside untaxed wages that they may use to cover their out-of-pocket expenses on medical services (Christianson, Parente, & Feldman, 2004). This therefore means that the CDHC is made up of elements such as interactive tools and information, a special account and the health plan. In this regard, companies contribute to special accounts of their employees.
Given the nature of HMOs and PPOs and the characteristics of each, it is obvious that PPOs is the best option for Solar Solutions as it provides its members with a wide range of choices and greater flexibility (Bardey & Rochet, 2010). This is due to the fact that the organization is willing to pick the option which is not too expensive but which provide excellent services to its employees (Bardey & Rochet, 2010). Therefore, since PPO is a bit expensive than HMOs, the company should pick PPOs and then through CDHC employees will be able to pay a certain percentage of the total cost of the plan.
In conclusion, there are many things to consider when selecting the bets health insurance plan. Such factors include the flexibility of the plan, the choices and facilities offered to members by the plan (Bardey & Rochet, 2010). Therefore, it is logical to choose PPO since it enables members to have a wide range of choices by offering them greater flexibility.
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