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Describe Why an Employee Might Select a PPO Health Insurance Benefit Over an HMO

Many employers are increasing the health insurance options available to employees. These options include preferred provider organizations (PPOs) as well as health maintenance organizations (HMOs). Many employees choose to enroll in the PPO health plan rather than the HMO due to the plan's flexibility.

  1. Doctor Variety

    • PPOs offer insured members access to a greater variety of doctors than an HMO. HMOs require the insured to visit a doctor who is part of the HMO to receive coverage. PPOs list doctors within a preferred network and pay a higher percentage of the cost for members visiting these doctors. Members can also visit doctors outside of the network and still receive benefits. An employee who is currently receiving treatment from a particular doctor for a health condition can continue seeing that doctor under a PPO. The employee might not receive any coverage seeing the same doctor if he enrolled in the HMO and the doctor was not part of the network.

    No Referral Needed

    • PPOs allow members to see their doctor without a referral. Members who want to see a dermatologist, a podiatrist or another specialist can visit that doctor and receive benefits under a PPO. Under an HMO, that individual would need to see her primary doctor first and receive a referral to a specialist. Without a referral, the individual would not be covered for treatment.

    Non-network Benefits

    • PPOs pay benefits when members visit doctors outside of the preferred provider network. These benefits often include an increased co-pay amount for the patient, but the insurance company still pays a portion of the cost. HMOs pay no benefit when a member sees a doctor outside of the network.

    PPO Costs

    • In exchange for the benefits provided by a PPO, employees often incur additional costs for this type of coverage. The premium paid by the employee is higher than that for an HMO. The employee also pays a deductible with a PPO. The deductible represents the amount of money the insured person must pay out-of-pocket before the insurance starts providing benefits. HMOs do not require members to pay a deductible. For many employees, the additional cost of a PPO represents money well spent.

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