Narrow network plans may be new or unfamiliar to some. But these plans have grown in popularity among self-insured employers since the Affordable Care Act (ACA) was enacted in 2010. As of 2019, these plans represent approximately 72% of all plans offered through ACA exchanges, according to analysis from health care consulting firm Avalere.

Health care costs in the United States are high and rising. In fact, health care costs are outpacing wages. Because health care coverage is becoming less affordable for many workers, many employers are evaluating strategies to ensure benefits remain affordable.

However, selecting a health plan that costs less is often complicated. A wrong choice can be costly for both employers and employees. One strategy many employers are embracing is implementing smaller network plans to meet employee needs and reduce overall health care costs.

Narrow network plans are designed to help employers contain costs while offering employees value-driven health care. This article provides an overview of narrow network plans, and offers considerations for employers deciding whether to implement them.

What are Narrow Networks?

A narrow network plan provides employees with a limited network of providers, including primary care physicians, specialists, hospitals and facilities. These plans are offered by traditional insurance carriers, but provide less coverage options than traditional health plans.

Narrow network plans emphasize the coordination of care. Receiving care in a single health system can result in better communication between doctors, so these plans allow easier and quicker access to patients’ medical records. This often leads to more effective care and decreasing long-term care needs, thereby reducing overall health care costs.

Additionally, these plans can offer members benefits, such as free health coaching and telehealth. These plans can also be paired with either broad or narrow prescription drug plans. However, narrow network plans rarely provide any out-of-network coverage.

Benefits of Narrow Network Plans

Narrow network plans are designed to reduce health care costs for employers and employees. Therefore, many organizations opt for these plans because they are more affordable than traditional health networks. Narrow network plans are more cost effective than traditional health plans because narrow network providers generally accept lower reimbursement rates.

Additionally, since network size can greatly impact a plan’s overall costs, a narrow network plan can help reduce the expense. As a result, these plans can be an effective way to control and reduce health care costs.

Since narrow network health plans often do not provide out-of-network coverage, they can also make care more affordable for employees by not having to pay for expensive out-of-network claims.

Additionally, these plans generally do not require referrals to visit specialists. Narrow network plans are different from health maintenance organizations (HMO), which require referrals from primary care physicians to see specialists. This plan feature can provide significant cost savings to employees—especially those with challenging or complicated health conditions.

Further, despite having fewer provider options, narrow network plans can offer proficient care and positive health outcomes due to better patient care coordination. Narrow network plan providers generally have a reputation for providing high-quality care resulting in better health outcomes for patients. Therefore, these plans can offer cost-effective health care that delivers positive outcomes to employees when done properly.

Considerations for Implementing Narrow Networks

Not all narrow network providers and facilities deliver the quality of care necessary to make narrow network plans an effective and a viable option. Therefore, employers should consider the following before adopting narrow network plans for their employees:

Identifying Workforce Demographics and Medical Needs

Narrow network plans have a limited provider network. So identifying employee health care needs can help employers determine whether the plan is a good fit. Some narrow network plans lack providers in certain specialties. It’s especially important for employers to review which specialists are included in a particular narrow network plan.

Understanding Geographic Limitations

Narrow network plans may not be a strong option for some workforces due to location. Unlike traditional employer health plans, narrow network plans are more geographically limited, as they’re generally confined to a smaller area or region. Therefore, some employees’ health needs may not be sufficiently covered by the limited network offered by these plans.

For example, some specialists may not be in-network within a given geographic area. Meaning, employees would need to see an out-of-network specialist and pay out of pocket for the visit. Accordingly, these plans may not be the best option for employers with a workforce spread across various cities or states.

Educating Employees

Despite having a more limited network of providers, these plans usually provide adequate coverage for most individuals. Therefore, when adopting a narrow network plan, it’s important for employers to communicate the plan’s value. Otherwise, employees may perceive these plans as limiting their care options. Additionally, providing employees with education related to providers is very important to help employees avoid costly out-of-network care.

Further, when adopting a narrow network plan, some employees’ existing providers may no longer be in network. Therefore, employers need to educate employees on how a narrow network will potentially change their providers. This can be done during open enrollment. During that time, employers can also help employees find employee new in-network providers.

Addressing Potential Challenges

While narrow network plans can help reduce premiums, they may also lead to costly out-of-network care. This can place employees in poor financial situations. Depending on an employee’s individual circumstances, they may need to budget for the possibility of incurring expensive out-of-network care, as out-of-network care is not uncommon under these plans.

Some employers address this issue by offering a tiered plan. This option consists of two or more different health plans, one of which is a narrow network plan and the other is a broad network plan. Employees can choose the coverage level that best meets their needs.

While employers will likely not save as much by offering a tiered plan as they would with only a narrow network plan, it’s still an effective way to reduce employer costs while meeting employee needs, since some employees are likely to select a narrow network over a more expensive broad network.

Additionally, these plans tend to have fewer provider options because of their smaller networks. As a result, employees may have more limited care options when staying in network.


Smaller networks can be an effective way to reduce and control rising health care costs while still providing employees with cost-effective, value-driven care. Understanding the benefits and the potential drawbacks can help employers decide whether these plans are a good option for their organizations.

Bonus: Florida & Brevard County Options for Small Businesses

The following options are relevant to small group employers (under 50 full time employees) located in Florida.

Florida Health Care Plans

Florida Health Care Plans is a community-based fully insured health insurance carrier. FHCP insurance plans are for small or large companies headquartered in Florida. This carrier offers a narrow network with healthcare centers and pharmacies where plan members can access affordable care and prescriptions.

Employers in Brevard County who offer FHCP can choose either the FHCP network, or the new Brevard Narrow Network. The Brevard Narrow Network includes Health First Health Plans providers and physicians.

Additionally, FHCP partners with Florida Blue of BlueCross BlueShield. Employers who offer FHCP plans can ‘stack’ them with Florida Blue plans, which have more extensive network options. This gives employers the flexibility to carry one or more plans with a narrow network, as well as one or more plans with extensive networks.


Florida Blue of BlueCross BlueShield offers the BlueSelect Network. This is FloridaBlue’s narrow network option. Employers can pair BlueSelect HMO plans with FloridaBlue’s expansive BlueOptions PPO plans. This option gives employees the choice between affordable smaller networks and more costly larger networks.

A feature of offering the BlueSelect and BlueOptions plans as a duo is that the plan designs are nearly identical. An employer could offer two plans with the same copays, coinsurance and deductible. The only significant difference would be the network and the cost. This makes the employee’s decision much easier.

United Healthcare

United Healthcare (UHC) offers the Neighborhood Health Plan (NHP), a narrow network plan. The UHC NHP is technically an HMO, but it is open access, so members do not need referrals to see specialists.

The NHP narrow network option pairs well with UHC Choice or Choice Plus plans. The NHP is affordable and has strong in-network coverage throughout the state of Florida. Choice and Choice Plus network plans are more expensive, but give members access to UHC’s expansive national network.

This is a strong employer health insurance plan option with companies who employ a geographically dispersed workforce. Also, employers with people with wide-ranging healthcare needs would benefit from this pairing.

Questions about narrow network plans? Reach out to The Harbor Financial Group for more information.

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