Health Insurance 101: HMO vs PPO
If you are now considering to get yourself a health insurance plan, congratulations! Give yourself a pat on the back for finally deciding to make your life more secure.
These are a lot of health insurance companies out there. Each company may have a myriad of health insurance programs for you to choose from. Whether you’re considering open enrollment with a major health insurance company or simply just checking out some benefits package from different companies, it is good to have some lowdown of this type of insurance.
At some point in the process of obtaining health insurance, you will be confronted with the terms “HMO” and “PPO.” Moreover, you will be asked to choose between them. You may scratch your head and be confused. What are these acronyms anyway? You only want an insurance plan, why does it have to be so complicated? We feel your pain!
It is important to understand what each term means because while both refer to networked prepaid health plans, there are some very important differences between HMO and PPO plans. A good grasp on how each plan works will help you choose one that best fits you.
An HMO stands for Health Maintenance Organization. An HMO plan is a type of managed care health insurance.
What this means is you are given access to a group of healthcare practitioners associated with in-network hospitals to deliver you the necessary medical services you need.
In an HMO, a plan member will have to select a primary care physician (PCP) first. Your relationship with your PCP is very important in an HMO plan.
Usually, this physician will be an internist or a pediatrician. This doctor is responsible for overseeing all of your medical care. Your PCP will also be responsible for referring you to any specialists within the network if the medical service is outside your PCP’s scope of practice.
Because everything is handled in-house, from lab tests to getting prescriptions filled, HMOs tend to be less expensive and more comprehensive than PPOs.
The Good Things About an HMO Plan
- Lower Cost: Again, an HMO plan is generally more affordable than PPOs. Your out-of-pocket medical costs and monthly premiums will generally be lower than with other types of plans.
- Having a Doctor You Can Trust: Because you will have to choose a PCP for an HMO plan, you will be able to build a good relationship with your chosen physician. He/she can be someone you can trust with your health. We all know that some medical conditions are very confidential. We only want to talk about it with someone we know and are comfortable with.
Seeing the same doctor will also make it easier to trace your medical history. Because you have a PCP to make the referral if another specialist is needed for your case, he/she is able to note your visits, diagnostics, treatments, and procedures which can come useful in the future.
- Keeping Your Medical Costs Under Control: In an HMO, there is a slim chance for a policyholder to be bombarded with ridiculously high medical bills. This is because when an HMO contracts with a network, it instructs the in-network healthcare practitioners what they can and cannot charge. This keeps your expenses under control. Otherwise, opportunistic healthcare providers may charge you with unreasonable bills for their services and treatments.
The PPO or Preferred Provider Organization is another type of managed care health insurance. Unlike the HMO where there is an exclusive network of healthcare providers to choose from, you have the ability to go to any specialist you wish to see. The physicians in a PPO plan are members of individual practices and have negotiated discounted rates with your insurance provider.
Just like the HMO, a PPO may also require you to choose a Primary Care Physician and they may also have an in-network for medical practitioners. But do not confuse both as the same things.
The major difference is that the PPO, and your PCP, will allow you to choose any doctor you wish, whether in or out of the network. Also, there is no need for you to ask your primary care physician for any referral before you visit another specialist.
Generally speaking, PPO plans often feature a higher monthly premium and out-of-pocket medical costs. However, this plan offers you more freedom to choose doctors and specialists that are in- or out-of-network without a referral from a PCP.
Whether you choose a doctor in or out-of-network, you will pay a copayment and there will be some kind of deductible. However, if the doctor you choose is not part of the network, you may have to pay for treatment at the time it is rendered. You can have this reimbursed by your insurer.
Your copay will definitely be higher than with an in-network physician. Furthermore, you may have less coverage with out of network doctors.
Why the PPO Plan is Good
- Freedom to Choose: Basically, you go to a Physician you “prefer”. It is as simple as that. PPO plans allow you to see any doctor, whether in or out-of-network. If you are someone who frequently visits many different healthcare providers in different areas of specialty, then this is the perfect health insurance policy for you. Moreover, You may be admitted to any hospital or facility of your own choice.
- No Referrals, Less Hassle: Yes, you get to choose a PCP, but there is no need to ask for a referral from him/her if you wish to see a different specialist. You can choose to go directly to the doctor, saving you time and money.
- A Wider Network: The PPO plan’s network is much larger than that HMO. Basically, because you have unlimited access to healthcare practitioners, either in- or out-of-network. This gives you wider options, giving you full control on the decisions you make.
Which One’s Better?
The honest answer is that when it comes to HMO vs PPO, which one is better depends on you.
Examine your present health condition and your foreseen medical needs. Also, you will have to examine the kind of lifestyle you live. Many factors affect your health and wellness. These factors may also help determine which kind of health insurance policy would benefit you best.