HMO and PPO Health Insurance Plans
Finding Affordable Health Insurance
In today’s health care market, choosing an affordable health insurance plan for you and your family can be made easier by knowing about the different types of plans available. While there are three types of private health insurance, traditional indemnity plans (fee-for-service plans), HMOs and PPOs, both HMO and PPO plans are managed care organizations with a network of health care providers that have agreed to provide services at less expensive pre-approved rates. Due to the increasing cost of health care, most insurers now offer more affordable HMO or PPO plans.
HMO (Health Maintenance Organization):
With this plan, you simply select a Primary Care Physician (PCP) in that HMO’s network. This is the physician you will initially contact for all your medical needs. If necessary, your PCP will direct and refer your care to an approved network specialist. In most cases, HMOs will not cover your specialty medical care expenses without a referral by your PCP and pre authorization. If you obtain care without proper referral from your PCP, you may be responsible for paying the entire bill. An HMO will have defined coverage for emergency medical care if you are out of town traveling and unable to see your PCP. Most HMO policies require a minimal copayment of $5, $10, or $20 for office visits, tests, and medication. In joining an HMO, you should find that in using the physicians and hospitals that are a part of the plan, you would have little out-of-pocket expenses making it very affordable.
PPO (Preferred Provider Organization):
Like an HMO, this is a group of health care providers that have agreed to provide services at pre-approved costs. As with an HMO, you simply choose from a list of physicians within the PPO network or outside the network if you so prefer (at a higher cost). Unlike the HMO, with a PPO you do not need a referral to see a specialist. However, if you do choose to see a physician outside the PPO network, you will pay more for the service. Most PPO providers give full coverage for emergency treatment regardless of where it is performed; however you will likely still have a copayment. Each plan varies in coverage so it is important to review the policy information. With a PPO, you will more than likely have a copayment for each visit. It is typically 10 percent of the charges for network providers and 30 to 40 percent for non-network providers. You will be required to pay an annual deductible too. For an individual PPO policy, an average deductible is around $200, and $500 for a family policy. You will have more flexibility with a PPO verses an HMO, however, your total out-of-pocket expenses are generally higher.
If you are looking to obtain a health care policy that is less expensive, but do not mind having more restrictions, an HMO will most likely fit your needs. If you prefer a policy with more flexibility and do not mind paying a little more for this, a PPO could be more suitable for you. Most employers who offer health insurance to their employees offer one or the other, or both plans.