What is the Difference Between HMO and PPO?
Health insurance can be a confusing world of acronyms. And being fully educated on the options for insurance plans means running into terms like “HMO” and “PPO.” These are the two most popular types of insurance plans for both private and federal health insurance. People act like these terms are common knowledge, but what do they actually mean?
What is a PPO?
What does PPO stand for? Preferred Provider Organization.
Selecting a PPO plan grants members access to a network of doctors, hospitals, and clinics at a discounted rate. There is no need to choose a primary care physician, and there is no requirement to get a referral to see specialists, whether they are in or out of network. PPOs have a monthly premium and for services rendered, you will pay a contracted rate or copay.
What is an HMO?
What does HMO stand for in insurance? Health Maintenance Organization.
What is HMO, anyway? Selecting an HMO plan also grants members access to a network of doctors, hospitals, and clinics at a discounted rate. An HMO plan requires members to choose a primary care physician, who can refer them to specialists as needed. An HMO has a monthly premium paid, and may have a co-pay or contracted rate associated with services, depending on the plan.
What is the Difference Between HMO and PPO?
When deciding between health insurance PPO vs. HMO, remember that both offer a network of When deciding between health insurance PPO vs. HMO, remember that both offer a network of healthcare providers with in-network benefits. Both include emergency coverage (including urgent care), and both typically include prescription drug coverage as well. So what makes these plans so different?
Network Size
PPO: Since PPO plans are not restricted by network, there is a large selection of healthcare providers.
HMO: The network size varies with each health maintenance organization.
Primary Care Physician Requirement
PPO: A primary care physician is not required.
HMO: A primary care physician is required.
Ability to See Specialists
Both HMO and PPO plans allow patients to see specialists. But there is one key difference between HMO and PPO plans regarding specialists:
PPO: No referral is required to see specialists.
HMO: A referral is required from a primary care physician.
Costs
Note that staying in-network is the low-cost option for both plans.
PPO: These plans are typically more expensive since they allow patients more freedom to go out of network. Deductibles range from $200 – $5,000 for individuals and out-of-pocket maximums can range anywhere from $1,000 – $13,000. For families. k. True costs for services are at the time of the service, but preventative care is typically no cost base on the ACA guidelines.
HMO: These plans save members money by only referring them to in-network providers covered by their insurance. Small deductibles or copayments may be required in addition to the fixed monthly premium.
It is also important to note that since private companies set the prices of drugs, clinic visits, and even sometimes hospitalization, variation is to be expected in healthcare cost estimations.
Out-of-Network Coverage
PPO: Patients can opt for out-of-network coverage, but it will come at a higher cost. Additionally, non-emergency out-of-network benefits are available.
HMO: There is no option for out-of-network coverage. HMO plans do not provide non-emergency out-of-network benefits.
Availability
PPO: Patients may find that PPO plans are more convenient for rural locations if the HMO network does not reach certain locales.
HMO: Patients may find that HMO plans are not convenient if their location does not have in-network options close by.
To sum up the difference between HMO and PPO in terms of benefits and drawbacks:
HMO Pros
HMO is less expensive due to lower monthly premiums and low or nonexistent deductibles.
HMO Cons
HMO offers no out-of-network coverage. Therefore, it has a smaller selection and less availability for sparsely populated areas.
PPO Pros
PPO offers out-of-network coverage, so members have more freedom to choose which healthcare service provider they want to work with. It is potentially more convenient for sparsely populated areas.
PPO Cons
PPO is more expensive due to higher monthly premiums and variable deductibles. Additionally, a claim and a payment upfront may be required.
HMO vs. PPO: Which is the Right Choice for You?
HMO vs PPO: which is better? Both plans offer excellent options and support. But choosing which is right for you will require patients to discern their healthcare priorities.
For example, perhaps someone wants a primary care physician. It can be beneficial to have an ongoing relationship with someone who monitors your health. But sometimes, especially if you move around a lot, you do not need or want that type of doctor-to-patient relationship.
If someone already has a primary care physician before joining an HMO network and that physician is not a part of the HMO network, you will likely have to switch out your PCP for an in-network one. On the other hand, PPO plans allow patients to keep their current primary care physicians.
Deciding upon a healthcare plan also requires setting a budget for healthcare services. If cost is not a concern, perhaps a PPO plan with maximum flexibility will work best. For the lowest cost option, an HMO plan will provide excellent coverage.
HOW EDEN HEALTH CAN HELP
With Eden Health, you are not on your own to navigate the intimidating insurance landscape — we can help your employees understand the benefits associated with HMO vs PPO insurance.
Our Healthcare Navigators can also help employees find answers for any question they may have, like reviewing insurance claims, finding the in-network specialist they need, managing medications, and estimating costs.
Contact a member of our team today to see how our employee health solutions can help your workforce.
