HMO versus PPO: Which Plan Is Best for You and your family?
Today’s consumers of health insurance have a range of options : these settle into four basic groups: HMO (Health Maintenance Organization), Indemnity (fee-for-service), PPO (Preferred Provider Organization), and POS (Point-of-Service) plans. All can provide quality care, and each has its own advantages. If your highest priority is staying with your current doctor, you might have to choose an indemnity plan. If you want the flexibility of seeing any doctor, you might go with a PPO or POS. If cost savings is your goal, an HMO might be right for you. By far, the two most popular types of health insurance plans are PPO and HMO. Here is an overview of the two types of plans and how they compare.
As the name Health Maintenance Organization implies, an HMO controls costs by maintaining the health of the plan participants and preventing expensive diseases. The focus of the medical professionals in an HMO is “wellness” care, providing well child doctor’s office visits, immunizations, mammograms, Pap smears, and other disease screenings. To keep costs down, each HMO contracts with a network of doctors, nurses, and other health care professionals who agree to adhere to diagnostic and treatment guidelines. HMO policyholders must obtain their health care services from medical professional within network.
To control costs and ensure quality, each HMO relies upon a network of experienced physicians to manage the care each plan member receives. These physicians are known as primary care doctors. They are the first point of contact when a plan member needs diagnosis, treatment, or regular physicals and screenings. Should the HMO plan member need to see a specialist, the primary care doctor will refer the patient to a specialist in the network. The HMO plan will not pay for visits to specialists without a referral from the primary care doctor.
HMOs typically cost less than other health insurance plans. HMO plan members pay a fixed premium to gain access to a full range of health care services. In addition to the premium, the HMO member also must pay set amounts, known as co-payments, for office visits, medications, and other services.
A PPO, or Preferred Provider Organization, is a managed care organization similar to an HMO in that it delivers health care through a network of medical professionals who have agreed by contract to follow certain guidelines in diagnosis, treatment, and billing. PPOs focus on preventative care much as HMOs do, offering physicals and routine screenings such as prostate exams, Pap smears, and mammograms. The main difference between a PPO and an HMO is that a PPO will pay a portion of the expenses for medical attention received outside the network of preferred healthcare providers. Many people find this flexibility to be especially valuable when they have an relationship with a medical specialist, such as a gynecologist or pediatrician who is not within the network of preferred providers. The PPO does not pay the as much for services obtained outside the network of preferred providers as it does for services received within the network, but many people are willing to pay a little extra in order to maintain their relationships with their favorite physicians.
With a PPO, the health insurance provider pays the majority of medical costs, but the PPO policyholder is responsible for paying some expenses, including:
Most PPO plans require the policyholder to pay a certain amount of money out of pocket before the plan begins to cover medical expenses. These out-of-pocket costs are known as the annual deductible amount. The amounts vary from plan to plan and provider to provider.
CoinsuranceThe PPO policyholder also must pay certain percentage of each medical bill, even after the annual deductible obligation has been met. These additional out-of-pocket expenses are known as coinsurance.