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HMO and PPO plan: what are the differences?

HMO and PPO plan: what are the differences?

HMO and PPO plan: what are the differences? When shopping for health coverage, it’s important to make sure the plan meets your family’s health needs, lets you see your preferred doctors or specialists, and fits your budget. Generally, you will have a choice between a health maintenance organization (HMO) plan and a preferred provider organization (PPO) plan.

In this article, we explain and compare the following aspects of HMO and PPO plans:

  • Advantages and disadvantages of the HMO plan
  • HMO plan costs
  • Advantages and disadvantages of the PPO plan
  • PPO plan costs
  • HMO and PPO plans (comparison)
  • Other types of health plans (EPO and POS)
  • What to consider when choosing health coverage
  • What is an HMO plan?

An HMO plan is based on a network of hospitals, doctors, and other health care providers who coordinate care within the network and provide their services for a fee. Many providers in this plan charge based on the number of members, not the number of doctor visits. For this reason, HMO plans are much cheaper than PPO plans. An HMO plan typically covers only care from the plan’s contracted providers, known as “network providers.” If you are covered by this plan, you may need to select a primary care physician to manage your health and refer you to an in-network specialist. Although the most common is that care is kept within the network, HMO plans sometimes refer members to out-of-network specialists if needed care is not within the system.Also, if they need emergency care, members can go to the nearest emergency room.

 

Advantages of HMO plans

  • Compared to PPO plans, the advantages of HMO plans make them a popular option if you have to watch your budget or if you don’t expect to make many doctor’s visits.
  • Monthly premiums are lower, and so are typically your out-of-pocket costs.
  • Out-of-pocket costs are lower for most prescription drugs.
  • Claims do not need to be filed as often, since medical care is often in-network.
  • You have a primary care physician as an advocate to coordinate and manage your care.

Disadvantages of HMO plans

  • You must get in-network care unless it is a medical emergency.
  • If your current doctor is not part of the HMO network, you will need to choose a new PCP.
  • What are the costs associated with an HMO plan?
  • Typical costs include deductibles (the amount you must pay before your insurance pays part of your medical bills) and monthly premiums (the amount deducted from your paycheck).

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