If your employer still offer health care insurance, you may find that your benefits have either been pared down or your contribution to the plan has been jacked up. When open enrollment rolls around, you may want to rethink your options, particularly if you’re given a choice between a PPO health insurance plan and an HMO health insurance plan. Here are some basics to help you understand the different features, advantages and limitations.
Both HMOs (Health Maintenance Organizations) and PPO (Preferred Provider Organizations) are types of managed health care systems. Unlike traditional pay for fee plans (a rapidly fading dinosaur of a gentler age), managed care is intended to control health care costs by managing (or limiting for you cynics) your access to providers and services. Of the two, HMOs are typically place the most restrictions on your choices, but they also tend to be the cheaper health insurance option of the two.
An HMO health care plan requires that you choose a primary care physician – basically a gatekeeper that you must consult first before you can see a specialist. Any referral will almost always be to another physician or health care provider within your HMO’s network. If you seek health care on your own outside the network, you will not be reimbursed . Exceptions are if you need emergency care traveling away from home or when HMO services simply aren’t available. Generally, an HMO sets a co-pay for services and there is no annual deductible, if your are part of a group plan. (HMOs that offer individual policies may require a deductible and co-pays depending on the plan you choose.) An HMO can be a good way to save money (important in this time of rising health care costs). However, if you have a GP, or OB/GYN or specialist you really like, unless he or she is in the HMO network, you can kiss that relationship goodbye. If you don’t like going through a gatekeeper when you KNOW you need to see a dermatologist or orthopedic surgeon, then you’re not going to be happy with an HMO. You need to balance cost-savings against choice and spontaneity.
A PPO will typically give you more flexibility than an HMO. For example, you won’t need a primary care physician; you can pick a specialist from the plan network and make your own appointments. You may even be allowed to receive some reimbursement for services out of network, but the percentage will be significantly less than what is covered in-plan. This freedom comes with a higher price tag than the more limited HMO; your PPO premiums and out-of-pocket costs will generally be higher. PPOs may also require a deductible (especially for hospital stays).
HMO or PPO? If you’re lucky enough to be given a choice, weigh cost advantages of one against the convenience of freedom and flexibility of the other.