Choosing a health insurance plan can be tricky if you don’t know the differences between the various types. Each one comes with unique pros and cons, costs, and other factors that’ll ultimately affect your decision.
An HMO and a PPO plan are the most popular kinds, but there are also HDHPs, POS’s, and EPOs. In this guide, we’ll explain the top two in more detail. Once you know what to expect, you’ll be able to decide what’s better for your lifestyle, your pocket, and your needs.
What to Consider
When you’re comparing health plan options, there are a few factors to keep in mind. After all, it’s a personal decision that’ll impact every aspect of your life.
Your Health
If you’re immunocompromised or suffer from a chronic condition, you’ll likely need more comprehensive cover. If not, you might prefer an option that’s cheaper but has fewer benefits.
Your Family’s Health
Similarly, you’ll need to consider your family’s health requirements. That’ll help you decide whether a group or individual plan is best for your loved ones.
Finances
Apart from your monthly premium, the healthcare plan you choose will also come with deductibles and co-payments. Extra expenses could derail your budget, so it’s vital to consider all financial aspects.
Generally, a higher monthly payment means lower out-of-pocket costs and vice versa. If you’re opting for a plan on the Health Insurance Marketplace, then it’s also worth finding out if you qualify for any premium tax credits.
Flexibility
If you need to see a specialist regularly, then you’ll probably want a plan that doesn’t require a referral each time. Similarly, you might have your own doctor and other health care providers. Do they accept the kind of insurance you have?
What Is an HMO Plan?
A health maintenance organization (HMO) plan makes up more than half of all marketplace options, but only around 19% of employee healthcare offerings. Generally, it comes with lower premiums than a PPO, but a smaller network of hospitals and medical professionals.
You’ll also have to choose a primary care physician (PCP) who coordinates your care. This means you’ll need a referral to see a specialist. If you already have a doctor, it’s a good idea to check whether they’re included in your network.
If not, then start by exploring your options and choosing a PCP carefully. They’ll be responsible for all your medical needs, so it’s crucial to find one that ticks all the boxes.
An HMO plan doesn’t usually allow you to seek medical care outside of your network or without a referral. If you do, then you’ll be liable to pay the expenses yourself. However, you’ll still be covered in an emergency.
HMOs typically come with deductibles, which is the amount you pay before your coverage kicks in. However, it’s usually lower than other plans.
An HMO might be the right choice, if:
- Your doctor or specialists are already a part of the network
- You seldom need referrals
- You’re content with the limitations
What Is a PPO Plan?
A preferred provider organization (PPO) plan ordinarily has much higher premiums and deductibles than an HMO. However, it offers more flexibility when it comes to choosing healthcare providers.
Around 49% of the workforce uses an employer-based PPO. Individual plans are significantly lower, at about 15%.
A PPO plan allows you to use both in and out of network providers, although the latter will still cost you more. You can also see a specialist without getting a referral.
However, expensive services might require pre-authorization. This means you’ll first need to get approval from your insurance provider.
PPOs also include an out-of-pocket maximum for in-network treatment or care. The amount varies, so it’s prudent to check this when you’re looking for a plan.
This kind of healthcare policy is less restrictive than an HMO but more expensive. While you’ll have a much more extensive list of available providers, your cover will only kick in once the deductible limit is reached.
It’s up to you to decide whether the costs justify the flexibility or if you’ll still get sufficient coverage with an HMO plan that has lower premiums.
PPOs could be an ideal choice if:
- You prefer the freedom to choose healthcare providers from a wider network
- You see specialists regularly and don’t want a referral every time
- You’d rather pay a higher premium to get more flexibility
Choose the Plan That’s Right for You
Health insurance can seem confusing at first, but you can refine your options once you understand the fundamentals. HMO and PPO plans are two of the most common types, although they differ significantly.
Before making a decision, consider your health, your family’s medical needs, finances, and the kind of flexibility you want. An HMO plan might be cheaper, but it comes with restrictions. Conversely, a PPO costs more but gives you greater freedom.
Do your homework, compare options, and find out what in-network providers are close by. This will help you choose the plan that suits your needs, your budget, and your lifestyle.