What Is an HMO?
An HMO is a type of health insurance plan that’s designed to lower your medical costs. You select a primary care doctor from a network of providers who helps coordinate your health care needs, referring you to specialists if necessary.
What Is a PPO?
A PPO is a type of health insurance plan you can use to seek care from different doctors without a referral. But you may have to pay more if you seek care out of your network.
What’s the Difference Between an HMO and a PPO?
An HMO and a PPO are both types of health care plans but there are several differences between the two. You don’t have to select a primary care doctor with a PPO. You can go to the doctor you want without a referral. This means more flexibility and freedom to visit different doctors.
Specialists
You’ll need a referral from your primary care doctor if you want to see a specialist and you have an HMO. You can call and make an appointment with a specialist without a referral if you have a PPO.
Premiums
Both HMOs and PPOs require paying a premium. This is the amount of money you pay each month for your insurance. HMOs typically have lower premiums compared to PPOs.
Deductibles
Your health insurance deductible is the amount of money you have to pay to the health care provider before your health insurance coverage starts. Both HMOs and PPOs usually have deductibles, but HMO plans are typically cheaper and may not have any deductible at all. You may have a separate deductible for out-of-network providers with a PPO.
Coinsurance
Coinsurance is the percentage of your health care costs that you’re responsible for paying out of pocket. It kicks in after you’ve met your deductible. Both HMOs and PPOs can require coinsurance. HMOs typically have lower coinsurance amounts compared to PPOs. You may have a low coinsurance for providers who are in the network with a PPO, but you may have to pay more if you choose to go to an out-of-network provider.
Out-of-Pocket Costs
Your out-of-pocket costs with an HMO are predictable and often less than other insurance types if you stay within the network. Your out-of-pocket costs with a PPO can vary. You’ll typically have to pay more if you go to out-of-network providers. But out-of-network care providers might be able to balance bill you. This means you’d have to pay the difference between the amount the doctor charged and the amount your insurance company paid.
Out-of-Network Costs
Out-of-network care isn’t covered with an HMO unless it’s a true medical emergency. You’re responsible for paying the bill if you choose to go to a provider outside your network. Out-of-network benefits are included if you have a PPO. You’re permitted to seek care from any provider, although you might need to pay more for out-of-network providers.
Filing Claims
You’ll most likely never have to file a medical claim if you have an HMO. Instead, your provider bills your insurance company and your insurer pays the provider directly. You usually won’t have to file claims with a PPO, but you may have to if you visit out-of-network providers.
Which Is Right for You?
HMOs and PPOs are both popular types of health insurance plans. Ask yourself these questions to help you decide which is better for you.
Do I need to keep my monthly costs low? An HMO might be better if you do. Do I already have a doctor I prefer to keep seeing? If so, you’ll want to check and see if this doctor is in your network. A PPO might be the better choice if they’re not. Am I a traveler? A PPO will provide greater flexibility if you frequently travel and leave your network’s area. Do I want a primary care doctor to help manage my health care needs? An HMO is the better choice if your answer is yes. Do I mind having to wait to get a referral before I see specialists? You might prefer the freedom of a PPO if you don’t want to wait.
An HMO and a PPO are both solid options, but only you can decide which is right for you.
