With numerous available healthcare plans, there is a possibility of confusion while deciding which health insurance is best suited for you. Therefore, this article provides you with an analysis of the comparative advantages and disadvantages of the two most popular health insurance plans, HMO and PPO, to help you make a choice.
HMO or PPO, which is better? Which one should I choose? What is the difference between the two? These are some common questions that come to our mind when we are deciding our health insurance plan. But before knowing which is better, let us first look at what both these plans are.
What is HMO?
The HMO (Health Maintenance Organization) is a prepaid managed healthcare plan, which provides doctor visits, hospital stays, diagnostic tests, surgeries and all other healthcare services to the insured. In this plan, entire health services are managed by a primary care provider (PCP), who is under a contract with the HMO.
The insured is assigned to this PCP and to refer other doctors and specialists, the insured has to go through this provider. In most cases, the doctors and specialists are also contracted with the HMO. Therefore, the insured cannot choose the hospital or specialist. Whatever care or services are to be given through a network healthcare provider, should be previously authorized by the PCP. However, for your children, you can choose a pediatrician or a family physician to be their PCP. For any diagnostic services like lab tests or X-ray, your provider will give you the referral, but in case you don’t have a referral or want to go to a doctor outside your HMO’s network, you will most probably have to pay for all or most of the cost for that treatment.
What is PPO?
Similar to HMO, PPO or Preferred Provider Organization is also a prepaid managed health plan that has contracts with a network of preferred providers, from which the insured can choose. You don’t have to select a PCP or need referrals to see other providers in the network, rather, if you receive care from a doctor or specialist in the preferred network, you will only be considered responsible for your annual deductible and a co-payment for your visit.
However, the member healthcare providers and the PPO sponsors will have already negotiated the cost for each type of service they provide. Normally, the insured has to pay for the services provided, and the PPO sponsor reimburses the insured for the cost of the treatment. Although, in this plan, the insured has the freedom to receive health services outside the preferred network, he/she has to pay a higher amount and file a claim with the PPO to get reimbursed.
HMO Vs. PPO Health Insurance
| Factors | HMO | PPO |
| Premiums | HMO is inexpensive, compared to a PPO, as the copay is very low or sometimes even free. | PPO is more expensive. If your specialist is not a member of the PPO network, you have enrolled for, you will have to pay more from your pocket. |
| Claims | All the providers are expected to file a claim to get paid. The insured need not file a claim and the providers have to do it on their own, for which they will not charge the insured. | If the insured is getting care from a network provider, he/she need not file a claim, but if the insured is taking care outside the preferred network, he/she has to pay the provider in full, and then file a claim with the PPO to get reimbursed. |
| Referrals | In HMO, the insured always needs a referral to consult a specialist or doctor, except in emergency situations. | In PPO, the insured doesn’t need a referral to see a doctor. |
| Rules and Regulations | HMO has restricting rules and regulations like the insured can refer only to the doctors on the HMO list and there are fixed patient quotas, wherein the doctors have to see a specific patient quota every day. | PPO is more flexible, as the insured can refer doctors outside the preferred network. |
| Best For | People who are in good health and require medical checkup, only once or twice a year. | People who have frequent doctor visits, require more time with their doctor and demand more freedom in their healthcare choices. |
I hope this article provides you a fair idea of what exactly these health insurance plans are and which plan is more affordable and suits your requirements. Whichever plan you prefer, make sure you do not compromise on your health and choose the best plan. However, if you are still unable to decide, consult your state health department or a certified insurance agent for more details and a clearer picture.
