Open-enrollment season is approaching -- that time of year when employers offer health-care coverage options to their employees -- and once again the issue of "open" versus "closed" health care networks is surfacing.

With an "open" network, employees may go to physicians both in and out of the health benefit plan's network of doctors and hospitals. The insurer pays pre-negotiated rates when employees and their dependents seek care from in-network providers, while the employees pay for any co-pays or deductibles. When the individual goes out of network, the employee is often responsible for a larger portion of the bill.

With a "closed" network -- historically associated with health maintenance organizations (HMOs) -- the insurance pays for medical expenses only when employees and their dependents seek care from a network provider. People who seek care outside the network are required to contribute either a greater share of the costs or all costs.

The major advantage of a closed network is cost savings. Closed-network coverage typically has smaller premiums for a similar benefits package.

Up until quite recently, employers preferred open networks because they wanted to give their employees more choices in their medical care. But there are now signs that some employers are becoming more interested in switching to a closed network to lower costs. National health insurers' networks tend to have thousands of physicians, so changing to a closed network also has become less of a concern for employees whose plan is administered by a national carrier.

Employers should make sure their employees know the difference between an open and closed network, and understand what additional costs they may be responsible for when seeking care out of network.

-- Stephanie Bernaciak-Massaro,
UnitedHealthcare,
svbernaciak@uhc.com

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