We get asked all the time, what is the main difference between an HMO vs PPO. Well, let’s see if we can help answer this for everyone.
HMO in short stands for Health Maintenance Organizations and PPO is short for Participating Provider Options. An HMO is a type of health insurance plan that gives you access to certain doctors and hospitals, often called network or contracting doctors and hospitals (sometimes called “providers”). HMO basics: When you sign up, you select a primary care physician (PCP) from a network of doctors. Your PCP is your first point of contact for most of your basic health care needs. Women can also select an OB/GYN for obstetrical and gynecological care. If you need special tests or need to see a specialist, your PCP will give you a referral to see another doctor. Because HMOs generally have smaller networks, and because you have to have a referral to see a specialist, HMOs generally have lower monthly rates than other types of plans. They usually feature low deductibles or no deductible at all. Remember a deductible is the amount you pay out-of-pocket before your plan kicks in. HMOs usually feature low copayments as well. Copayments are those set amounts (usually a dollar amount or a percentage) that you pay when you receive care at the doctors office or clinic. HMOs normally have the highest level of coverage – for the lowest cost – as long as you use doctors, hospitals and specialists in network. If go out of network, you may not have coverage at all.
PPOs have a network of doctors, specialists and hospitals just like an HMO; however, there are some key differences between the two. With a PPO plan, you don’t have to choose a primary care physician. You can see any doctor, hospital or specialist in the network or outside the network, and you generally don’t need a referral to see a specialist. Now because there is more freedom on who you can see, the PPOs monthly costs are generally higher than HMO plans. When you see a doctor or hospital in network, your out of pocket costs are lower, but when you go out of network your will pay a little more, or you could have to pay for it all. PPO plans generally have a deductible just like the HMO. So, for example, if your PPO plan has a $500 deductible, your coverage doesn’t begin until you’ve paid out-of-pocket for the first $500 of your own medical expenses. Preventive care services are not subject to the deductible.
What do I Choose?
As far as which one is the best choice, they each have advantages and disadvantages and a number of factors come into play. First of all, if you have to go with price, then the HMO will be the lowest price, however you have to know you will typically have less doctors in network than a PPO, you will have to select a Primary Care Physician (PCP) and only see them, and that PCP will have to refer you anytime you need to see a specialist. If you do choose an HMO, make sure the doctor you “like” to see is at least in network. There are no guarantees that your doctor will stay in network the whole year however, so if you choose an HMO, you must be able to be flexible.
In our opinion, PPOs are the way to go of course if you can afford the monthly cost. You have freedom to choose your doctor, don’t have to worry about referrals, and if you don’t like a doctor you saw, you can just see another doctor in network and not have to change PCPs. It is simple and less likely of having an out of network claim.