HMO Vs. PPO Plans

Selecting the right health insurance plan may be one of the most important decisions that you make for you and your family. There are a variety of policies from which to choose, and understanding the differences will help you decide which one is best for your situation. Two of the most common plans are the Health Maintenance Organization (HMO) and the Preferred Provider Organization (PPO). Each has unique features that you should consider prior to making your decision.

Types

• HMOs and PPOs are types of medical insurance plans. They offer two different levels of cost and access to health care. An HMO pays for services that are rendered by professionals and facilities that are in the network only. You must choose a primary care physician who determines if you need care with a specialist and approves medical procedures prior to you receiving them. PPOs allow you to see any medical professional that you desire, but pay a higher percentage of the bill if you choose those who are in the provider network.

Features

• Although policies vary, in general HMOs and PPOs offer coverage for medical-related expenses, including doctor visits and hospital stays. Depending on the plan, you may receive some type of coverage for prescriptions and lab work. Diagnostic tests and preventive medicine may be part of the benefit of each plan. HMO and PPO features vary based on the amount that you are willing to pay out-of-pocket and the flexibility that you need in seeing any physician you want. HMOs are restricted by geographical locations, while PPOs, generally, are not.

Benefits

• An HMO is like a prepaid medical plan, as long as you use network providers. In general, HMOs have no deductibles. If your plan carries a copayment, it will be low compared to that of a PPO.

  According to a ConsumerReports.org 2008 survey, more than 37,000 people with HMOs claimed that they had lower premiums, fewer billing problems and spent less money than those who had PPO plans.

  PPOs offer flexibility to see any specialist and obtain any diagnostic test recommended without having to obtain permission from a primary care physician. You can even travel outside of your geographical region, if you desire. A PPO is for patients with ongoing medical needs requiring a variety of specialists or those who would like to seek approval for alternative treatments.

Disadvantages

• With an HMO, you may not be able to choose the hospital or specialist who gives you treatment. Visiting a doctor outside the network will result in you being responsible for the entire bill. PPOs have higher copayments for doctor visits and require deductibles for individuals and families. Seeing a medical specialist outside of the provider network results in a reduction of benefits and higher out-of-pocket expenses.

Considerations

• For both HMOs and PPOs, consider any pre-existing conditions in those who will be covered to determine if they are allowed by the plan. Also, you may have to wait for coverage to take effect. There may be options for additional policies, such as dental or vision care. If you need to see a variety of doctors in a short period of time, or you desire flexibility, then a PPO plan may be right for you. If you want a lower premium and fewer billing issues, and you have a long-term favorite doctor, then an HMO may better fit your needs.