Health insurance is a part of life nowadays, and it’s vital to make sure you get the right coverage. There are so many different types of insurance plans, and it can be confusing when choosing which to go for.
Two of the most common types of health plans are HMO and PPO. It’s essential to understand the difference between an HMO and a PPO health plan. The more information you have about the pros and cons of each type of plan, the more confident you can be in making a decision on which is right for you.
What is an HMO Health Plan?
HMO stands for the Health Maintenance Organization. This is a medical insurance group that provides healthcare for the employees of many different companies. It’s one of the most popular insurance groups available and liaises with doctors who work in accordance with the HMO’s patient treatment guidelines.
Advantages of an HMO Plan
The primary benefit for people on an HMO plan is that you don’t need to fill out claim forms every time you see a GP or have a hospital stay. HMO liaises with associated doctors and hospitals. The customers are all given a card to show that they have insurance at that particular practitioner’s place.
You’ll be charged a small additional payment when you visit the doctor, but other than that, you’ll have a fixed monthly rate. This means that you can plan for your insurance expenses in advance.
Disadvantages of an HMO Plan
The main disadvantage of HMO plans is the limitations on the doctors and hospitals you can visit. You’ll be designated a primary care physician in the network. If the care plans alter, then you may have no choice but to change your physician.
Another thing to be aware of is that you will often wait longer for specialized care. With limited availability, you have to wait for a referral before receiving any special treatments. Your HMO plan does not cover any care that isn’t referred or isn’t an emergency.
What Is a PPO Health Plan?
PPO stands for Preferred Provider Organization. This type of plan also comes with a preferred network of healthcare providers. PPO is another popular form of health insurance that acts almost as the flipside to HMO plans.
Advantages of a PPO Plan
The PPO plan’s primary benefit is it includes the things you miss out on with HMO plans. You’re able to have much more freedom when it comes to seeing physicians outside the providers’ set network. Although it’s still preferred for you to stay within the suggested physicians, you will still be covered when seeing an alternative doctor or specialist, or going to a hospital that isn’t part of the preferred ones.
The follow up from this means that you don’t need to waste time waiting for a referral if you need specialist care. It gives you the option to be more in control when it comes to being proactive about your health.
Disadvantages of a PPO Plan
The main disadvantage in comparison to the HMO plan is the cost. By giving you more freedom to visit providers outside of the network, the premiums for PPO plans have to be set higher. However, it’s worth noting that there are often deductibles for the months you don’t claim anything on your insurance.
You are still encouraged to use providers within the network. While the PPO plan will give you some coverage for seeing external providers, it will still be at a higher cost than if you go to one of the recommended physicians.
The main problem is the unexpected additional expenses that can occur when using this type of plan. If you do decide to go for specialized treatments, then you will end up paying for that on top of your monthly premiums. If you choose to opt for a PPO plan, make sure you’re aware of the possibility of these extra payments and budget accordingly.
Conclusion
While HMO plans take away some of your choices when it comes to your doctor, they’re very beneficial for being able to predict your expenses. By restricting your healthcare to their own network, it’s easier for the provider to set the costs and confirm your premiums accordingly.
The PPO plans allow you much more freedom when you want to see a certain physician or need to visit a specialist. However, by allowing you this additional cover, it means that the premiums on this type of plan are higher.
Choosing either an HMO or a PPO plan is a very personal decision. There are advantages and disadvantages to both sides. It really comes down to whether you would prefer to see the doctors you want or be more in control of the amount you’re spending on your health insurance.