What is the scoop on PPO, HMO and HSA?

What is HMO?

HMO stands for Health Maintenance Organization. This form of health insurance combines a range of coverages in a group basis. Doctors and other professionals are paid a flat monthly fee whether you see them or not. You pay the same amount every month, as long as you see doctors within the approved network. If you need to see a professional outside the network, you will first need a referral from a primary physician within the HMO, and then there may be additional fees to see a doctor outside of the network. Any visit, prescription, or additional care must be approved by the HMO in order to be covered. Kaiser Permanente is an example of an HMO.

What is PPO?

PPO stands for Preferred Provider Organization. This is a health care organization composed of physicians, hospitals, or other medical specialists who provide health care services at a reduced fee. If you see a doctor within the network, you’re responsible for only a small fee. Within the PPO, you have some flexibility to see any doctor you choose. You can see out-of-network professionals if you’re willing to pay a higher price. There is often a copayment, deductible, and coinsurance, but you typically do not need approval from your primary doctor before seeing a specialist. A PPO is similar to an HMO, but the doctors are paid whenever you see them as opposed to a flat monthly fee. Ultimately, in a PPO, you have flexibility to see doctors—within or outside of the network—with less “red tape.”

What is HSA?

HSA stands for Health Savings Account. This is part of an employee’s health plan, and both the employee and the employer can make deposits into the account. The individual employee has the freedom to utilize these funds to pay for a variety of medical expenses, such as insurance co-pays, deductibles, and over-the-counter medications. In fact, you can even use HSA money to pay for cosmetic surgeries, glasses, dental work, etc. Nearly every medical expense can be paid with HSA money. The HSA account operates like an IRA—it earns interest. If you don’t use the money, you can take it out (tax deferred) when you’re 59 ½ years old. In order to setup an HSA, you must have an HSA-qualified insurance policy. This usually means you’re going to pay a higher deductible.

What is a medical sharing plan? Is it a good idea?

There are several “Health Care Sharing” options, but none of them provide “Credible Coverage”. 

Here’s how they work :

Each person or family is required to pay a monthly fee (this is NOT a premium). This monthly fee pays the health care costs of other families in the program. When you need health care, the money comes from this fund as well. In addition to their monthly fees, members are encouraged to give further money in order to help pay for the treatments of others. This is necessary because medical costs are high and the monthly fees are low.

None of these organizations will guarantee that your medical bills will be paid. This is very different from traditional insurance, and it can get very dangerous.

Take this example :

Couple A needs emergency care. Upon arrival at the ER, they present their card, and the hospital discounts the bill per the prearranged discounts. The hospital sends the bill to the health share company, who then examines the bill to determine if they will share the expense. (This is often a faith-based option, so several moral issues will preclude services being shared. If the health problem involves tobacco, alcohol, or a sexually transmitted disease, the bill is not likely to be covered.)

If the health share company accepts the bill and agrees to pay for the services, Couple A is required to pay the deductible. Then, the remainder of the bill is published for other members to contribute those extra dollars we talked about earlier. Obviously this will take some time!

So, after Couple A has received their emergency care, the hospital sends a bill for the remaining amount due. The sharing hasn’t been fully funded, so the couple must pay out-of-pocket and hope that their sharing community will pay for the rest of it. In the worst-case scenario, the bill may be sent to collections. The couple may be sued because they cannot afford to pay the bill while the health share company tries to gather funds.


There are many hospitals and medical providers that will not accept a patient if they are on a medical sharing program like this.  A simple internet search will pull up many examples of people being denied treatment because the hospital or doctor will only accept insurance.

Here's just 1 example that happened right here in Metro Atlanta : 

Local hospital denies mothers faith based healthcare coverage

Here’s the bottom line: health share companies can put you under undue financial risk. Traditional healthcare is available, and these insurance companies operate under laws and regulations to protect you and your family.

Umbrella Liability Insurance

Umbrella liability insurance is additional insurance coverage that rests on top of primary commercial general liability, automobile insurance and workers compensation insurance. Make sure the Umbrella provides additional coverage on the existing Sexual Misconduct and Professional Liability policies as well.

Cost – Can be purchased in increments of $1,000,000. We recommend that you consider Umbrella Liability by the time your church reaches 2 years old.

Property Insurance

When reviewing property insurance, be sure to discuss these five categories:

  1. Contents

  2. Computer Software and Equipment

  3. Inland Marine

  4. Improvements and Betterments

  5. Building Coverage


Coverage – Insures office furniture, machinery and computer equipment.

Cost – $20,000 in contents is approximately $250 annually.

Computer Software and Equipment

Coverage – Additional content coverage that specifies computers / software against additional perils not covered by a typical contents policy. Examples include damage from electric surges and loss of data. You will need to itemize your computer equipment and software. By that, we mean you will need to list your equipment and software and the cost on an EDP (electronic data processing) form. This is known as an “additional rider”.

Cost – $1.50-$2.00 / $100 value annually.

Inland Marine

Coverage – Insures mobile property such as a laptop computer, video / sound equipment. You may be required to itemize these mobile properties as well.

Cost – $1.50-$2.00/ $100 value annually.

Improvements & Betterments

Coverage – Check your lease agreement to see whether or not you have improvements (walls, re-carpeting, re-painting) and betterments to insure.

Cost – usually included in the Contents policy at that going rate.


Covers commercial buildings and personal property against a wide variety of perils or causes of loss, such as a fire. Obviously, you will not need Building Insurance until you own the facility.

Cost – Usually a rate multiplied by the replacement cost (this means no deduction for depreciation will be accounted for when the insurer pays your claim). Cost varies widely from $.30 – $1.10 per $100 value annually. Rural and coastal areas are more expensive than urban areas; frame is more expensive than brick, etc.

Liability Insurance

When discussing liability insurance, be sure to review these five categories:

  1. General Liability

  2. Employment Practices Liability

  3. Ministers / Lay Counselors Errors & Omissions

  4. Sexual Misconduct

  5. Directors’ & Officers’ Liability

General Liability

Coverage – Insures your church and its operations against third party bodily injury and/or property damage. Please notify your Insurance Agent before going on Mission trips to make sure you are adequately covered with General Liability.

Cost – Determined by square footage of area occupied. 2,000 square feet will cost about $200 annually.

Employment Practices Liability

Coverage – Protection from lawsuits resulting from wrongful discharge, sexual misconduct, discrimination, etc.

Cost – $35-$75 per employee annually.

Ministers / Lay Counselors Errors & Omissions (also known as Clergy Professional Liability)

Coverage – Protects Ministers and Lay Counselors against claims and lawsuits arising from counseling services. Usual coverage is up to $1,000,000 in occurrence and in aggregate (total of all occurrences) annually.

Cost – Rates vary $50-$250 annually (based on # of clergy or professionals and type of care offered). Note – If you are outsourcing consulting to one particular person or entity, then we recommend you ask that person or entity to place you under their insurance coverage. Most underwriters have two requirements: 1) at least one staff member needs to have a seminary degree and 2) the church needs to submit a formal typed plan on childcare precautions.

Sexual Misconduct

Coverage – Protects church employees and volunteers against claims and lawsuits arising from sexual misconduct allegations. You should have this Insurance once the church has youth programming.

Cost – $500-$1,000 annually (based on # of volunteers and childcare/daycare programming).

Directors’ & Officers’ Liability

Coverage – Protects Board Members and Officers against alleged third party lawsuits for mismanagement. Typical coverage amount = $1,000,000 per occurrence.

Cost – $50-$250 annually.

How does health insurance work

Traditional health insurance requires you to pay a premium to insure against future health-related expenses and to soften the blow of the big medical bills. This operates much like car insurance, where you pay a premium to protect yourself in the event of an accident. Usually with car insurance you have a deductible, an amount of money to pay out-of-pocket before your insurance company will begin to pay for damages.

Health insurance works in much the same way. There are various kinds of health insurance, but they generally work through a claims system. Your doctor provides treatment, and your insurance company receives notice of your claim. The company determines if your insurance policy covers this treatment, and the bill is settled. If any balance remains after the insurance company has paid their portion, then you must pay the remaining bill. This is what all that “Deductible” and “Coinsurance” stuff is all about.

If you go to the doctor, most of the time you pay a fee, regardless of your coverage under health insurance. Some health insurance plans come with a deductible. Others come with a per-use payment called a co-pay. Some come with coinsurance. Most plans come with all of the above: a co-pay, a deductible, and coinsurance. This amount can vary by plan.

A copay is a fee you pay, regardless of the bill or the service you’re having done. This is typically just a flat fee, depending on the type of procedure or the type of doctor you’re seeing. A deductible is the portion of the bill that you’re responsible to pay, up to a certain dollar amount. Once your deductible is met, coinsurance kicks in. You might see that coinsurance is 80% / 20%. This means that after you meet your deductible, your insurance company will step in and pay 80% of every bill. You will be responsible for the remaining 20% of the bill. Then, you can be thankful for the “Maximum Out of Pocket”: after you’ve met the deductible, you’ll pay 20% of every medical bill until you reach the maximum out of pocket. Then you’ll be finished paying medical expenses for the year.

All of these elements are designed to spread the risk among multiple people so no single person or family becomes responsible for 100% of the bill. This is the true definition of insurance: spreading the payments amongst multiple people.

Automobile Insurance

Automobile insurance generally falls into two categories:

  1. Owned Automobiles

  2. Non-Owned Automobiles

Owned Automobiles

Coverage – Protects church owned automobiles against third party claims. We recommend $1,000,000 per incident.

Cost – $1,000 per vehicle.

Non-Owned Automobiles

Coverage – Provides automobile protection to employee’s automobiles during Church activities and can also include coverage for rented / leased vehicles.

Cost – $250 annually.