With open enrollment right around the corner (Nov 1- Dec 15), you may be wondering whether to go with a PPO or an HMO. Understanding each of them will help you to decide which is best for you, so continue reading to make a more informed decision. The main differences between the two is cost, size of the plan network, the ability to see specialists and coverage for out of network services.
HMO - (Health Maintenance Organization)
Premiums are usually lower and have the lowest out-of-pocket costs in HMOs. Depending on the plan, you may have no deductible or a low deductible. HMOs, while often not having a deductible or having a low deductible, typically require copayment fees for non-preventive visits.
HMOs typically offer lower costs, but you will have a more restrictive provider network, and you will have to coordinate your medical care through a primary care physician (PCP).
Managed care plans try to reduce the cost of medical care while still maintaining quality care. HMOs were created as lower-cost alternatives to traditional payment models of medical care, like Fee-for-Service plans, where coverage is provided no matter what provider or hospital you use.
An HMO plan has a network of doctors and hospitals that you can use. However, HMO networks are usually smaller than PPO networks. Providers in these “narrow” networks agree to accept lower payments in exchange for access to patients in the insurer’s network. If you visit a provider who is not in the network, you will be responsible for paying the entire cost (except in the case of an emergency).
With most HMO plans, you may be required to choose a PCP. Using a PCP in an HMO plan is another way to contain costs. Care can be more efficient because one provider is coordinating it. Your PCP will be your main point of contact for all of your healthcare needs.
You may need a PCP referral for certain tests or to see a specialist. In some cases, you may also need to be pre-approved before receiving certain services. Your PCP will usually be the person to approve these services. This keeps costs down by ensuring specialized care is medically necessary.
PPO - (Preferred Provider Organization)
With a PPO plan, members still have access to a local network of doctors and hospitals. But they also have the flexibility to see any other provider anywhere in America. That’s as long as the doctor participates in and accepts the member’s health plan. If PPO plan members do choose to go out of the PPO network, their plan premium, copay or coinsurance may be higher.
One of the biggest selling points of a PPO (in addition to a greater selection of providers) is that you don’t have to see a PCP to get a referral to a specialist. With specialists already included in your preferred provider network, you can skip the middleman and head directly to the specialist you need.
While you can expect a higher monthly premium with a PPO, you can also count on a greater selection of providers and the freedom to see a specialist without a referral from your PCP. If you see specialists frequently or want to have fewer restrictions on out-of-network providers, this is the plan for you.
The reason that the premiums for a PPO are higher is because you are paying for more access to a greater network of providers and more flexibility with who you can see and where you can see them.
There are non-copay PPO plans and copay PPO plans. Check with your employer or health insurance provider to see which one you’ve got.
If you’re in good health with no special medical needs on the horizon, check out an HMO. If you have ongoing health care needs or just want to have greater flexibility when it comes to your providers, a PPO could be the right choice.
Figuring out what type of health care plan is best for you can get confusing. I hope this helps to guide you on which plan is best for you.