What’s the Difference Between an HMO and PPO Health Insurance Plan?

Are you looking for an affordable health insurance plan? If you’ve been researching your options, you know there are quite a few things to consider when choosing a plan.

One of the most important concepts to understand about health insurance plans is what type of plan they are. The two most common types of plans are PPOs and HMOs.

Let’s talk about what each of those acronyms stands for and how they impact your health insurance coverage.

HMO: Health Maintenance Organization

The most significant defining factor of a Health Maintenance Organization plan is that it limits plan members to a specific network of providers and facilities. This type of plan only offers coverage if the member stays within the network.

Receiving care outside of the network means that the individual will have to pay for the services entirely out-of-pocket. (There may be some coverage outside the network in emergency situations.) Another requirement of these plans is that the member must choose a primary care physician (PCP).

If the plan member needs to see a specialist provider, they must obtain a referral from their PCP first. And of course, the specialist must also belong to the HMO network.

Generally speaking, HMO plans have lower deductibles because of their restrictions. HMO plan members will also typically have fewer out-of-pocket expenses. They may not have annual deductibles and only have a copay due for office visits.

PPO: Preferred Provider Organization

Preferred Provider Organizations work in a manner similar to HMO plans, but their requirements are not quite as strict. PPOs also have a network of providers and facilities, but that network is usually much more extensive than those of HMO plans.

Also, PPOs provide coverage outside of their networks. However, coverage will be lower, and the patient’s expense will be higher than if the care is received within the network.

PPO plan members do not have to designate a primary care physician, and they do not need a referral to see a specialist provider.

PPO insurance plans usually have a higher monthly premium than HMO plans since they enjoy a little more freedom in choosing providers and have fewer limitations. The amount you’ll pay for office visits will depend on your plan. Some have copays per visit, and some have coinsurance costs. Most PPO plans include an annual deductible.

How to Choose Between an HMO and PPO Insurance Plan

When you are first deciding between an HMO and PPO plan, the two primary considerations are price and network.

If you need lower monthly premiums and you don’t mind switching providers to see one who is in-network, then an HMO plan might be an excellent option for you.

However, if you’d prefer the freedom of choosing your own provider and can pay a higher monthly premium, a PPO plan is a great option.

To help you decide, you should find out which networks your current providers participate in. If you already see providers that are part of an HMO network, that may make your choice even more straightforward.

You will benefit from either an HMO or PPO insurance plan if you understand your plan and know how to get the most of your plan’s benefits. If you need help choosing a plan, one of our agents would be happy to assist you!