Health Insurance - An Unaccounted-for Workforce Cost

PPO Plan

PPO plans were developed by insurance companies to try to control costs, as they offer incentives to insured employees to go to certain medical providers. The services offered by these medical providers are covered at a higher rate than services provided by those who are not on the preferred list. Typically, the cost of the service is paid at 80 - 90% of the usual and customary fee, with the employee having to cover the other 10 - 20 %, up to a certain maximum dollar limit.

In order to be on the preferred list, PPO providers also have to agree to discount the cost of their services. Insured employees will pay an additional 10 - 20% of the fee, if they want to use insurance benefits to see a provider who is not on the list, plus they usually pay this percentage on a non-discounted fee. Employees under a PPO plan also must pay separate co-pay fees for office visits and prescriptions. Wellness benefits can be included in a PPO plan, but the insurance premiums for these types of plans are usually a little higher.

The cost data shown in the graphs (Single PPO and Family PPO) for the first five years of the Dungarvin PPO plans were for a policy that we purchased from Employer's Health (a Humana company based in Green Bay). The last two years of data are from the PPO plan that Dungarvin purchases from Blue Cross Blue Shield of Minnesota. We were able to achieve some premium reductions by combining two existing groups (Dungarvin's Wisconsin and Minnesota insured employees).

On To HMO Plan