Difference Between HMO and PPO – Which to Choose

It is important to know the difference between HMO and PPO before you decide which coverage to use. It is not simply about deciding to get health insurance coverage and about getting the lowest rate. There is a little research to be done and get the findings organized to choose the health insurance plan that is best for you.

There are two types of affordable care plans, namely the HMOs and PPOs.

HMOs (Health Maintenance Organization)
HMO is an organization of healthcare providers (e.g. doctors and hospitals) that have contracted with an insurance company to offer their services at a fixed price.

HMO plans are normally quite restrictive and with lots of rules. You will be asked to select a primary care physician, who handles all aspects of your healthcare. The primary care physician must be a member of the HMO. This means that if you are currently seeing one who is not in the network, you will need to change doctors. In the event that you need to see a specialist, it is your primary care physician who will do the referral.

The advantage is that HMOs are cheaper compared to other plans. Premiums are lower, copayments are normally low or free. Do remember, though, that HMOs are profit-based businesses, and must somehow make money. This means that the doctors must attend to as many patients as possible daily and minimize costs for the organization.

PPOs (Preferred Provider Organization)
PPOs also have contractual relationships with insurance companies. Difference is that they are more loosely organized and are not as restrictive as HMOs.

With a PPO, you can choose to see whichever doctor you like, but if the doctor is not in the network, you will have to pay more out-of-pocket. You don’t need a referral to see a specialist.

While PPOs are more costly compared to HMOs, many people tend to choose them as they are less restrictive and your healthcare decisions are more within your control.

So, how do you decide based on the difference between HMO and PPO?

You can cover preventive care and emergencies with HMO individual or family health care plans, which also provides long term protection for you and your family. Note that it is also an affordable plan for those who are self employed and those who have families. What is really good is that it offers a lower premium and outside of catastrophic health plans, it is the most affordable plan. HMO also offers low deductibles, prescription drugs discount, and co pays on doctors.

Compared to HMO, PPO plans are a little more expensive, but it is still a more affordable option compared to fee for service plan. You can choose to lower monthly premiums by raising your deductibles.

Often, your decision will be based on your financial situation. HMOs are significantly cheaper, and limit the amount that you have to pay out-of-pocket. PPOs give your more flexibility and control.

Knowing the difference between HMO and PPO health insurance plans, you can then find affordable health insurance that suits your needs in terms of how to lower health insurance premiums and also the degree of flexibility that you can afford.