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HMOs vs PPOs...Which One Is Right For You?

HMOs vs PPOs
How should you decide between an HMO and a PPO? To determine whether an HMO or PPO type health plan is right for you, it is important to understand how they are different.

Health Maintenance Organizations (HMOs)

With an HMO you are expected to get all your care from a list of doctors, hospitals, and other providers contracted with the plan. You select a primary care doctor to provide your basic care and to be the one who refers you to other services and specialists. The plan won’t pay for care by a specialist, hospital, or other provider unless pre-approved by your primary care doctor (except in an emergency).

However, staying in network, your out-of-pocket costs can be fairly minimal making “co-payments” of $10 or $20 per office visit, depending on the type of plan you choose. An example of a popular HMO is Kaiser.

Preferred Provider Organization (PPO)

A PPO, falls between an HMO and a traditional indemnity plan. A PPO will contract with many individual doctors, hospitals, and other providers. PPO providers agree to a “contracted or preferred” rate for their patients, in which you generally pay a percentage of this rate.

The major difference from an HMO, is you will have some benefits if you see a provider outside of the PPO network. The benefits will not be as good as if the provider was contracted, but you will have some coverage unlike an HMO. Another difference between a PPO and an HMO is that you do not need a referral to see a specialist or other provider adding some flexibility if you want go directly to a dermatologist, chiropractor, psychiatrist, or other specialist.

How To Decide Which One Is Right For You:

  • HMOs are better for predicting costs by allowing co-payments and premiums to be the major out-of pocket expense.
  • PPOs are more flexible in terms of the providers you can choose.

Good Rule Of Thumb To Follow

  • Plans with the most comprehensive coverage at the lowest out-of-pocket cost require you to use a specified network of hospitals, doctors, labs, and other providers, such as an HMO. The more freedom you want, the more you’ll pay, in either premiums or out of pocket expenses.
  • Obtaining health insurance isn’t about finding the cheapest plan. The least expensive health plan is the one with the lowest price for the benefits you’ll actually use, not the plan with the lowest premium.

Lawyer Talk

Everyone’s financial status and health care needs are different. Therefore, it is always advised to meet with a health insurance professional to help you find a plan that works best for your personal situation and your budget. The above descriptions are general in nature, and should not be construed as a solicitation or recommendation to purchase health insurance.