Choosing between an HMO and PPO can be confusing. There are several major differences you should know about in order to make an informed decision.
A Health Maintenance Organization, or HMO, is a managed care provider for health insurance that coordinates with health care providers on a prepaid basis. HMO plans require you to choose a primary care physician to coordinate your health care, including referring you to a specialist when needed. HMOs require that you seek care within the network rather than simply seeking out a specialist on your own.
Generally, the only fees you pay for in-network services with an HMO are copayments for doctor’s visits and for other services including procedures and prescriptions.
HMO plans can be more cost effective in that there are less out of pocket costs, however the monthly premiums are typically higher than with a PPO.
A preferred provider organization, or PPO, is a managed care organization of doctors and other health care providers as well as hospitals that has contracted with an insurer or third-party administrator to provide healthcare at reduced rates.
PPO plans generally do not require you to select a primary care physician and allow you to seek out specialists on your own with referrals. As long as you remain in-network you are only responsible for your annual deductible as well as copayments and any applicable co-insurance payments.
PPO plans generally offer more flexibility and lower monthly premiums; however the sometimes large annual deductible, co-insurance and higher copayments on office visits and prescriptions can equal greater out-of-pocket costs.
An experienced, licensed insurance agent can help you understand the differences between PPO and HMO plans and help you assess which plan is best for your needs. Benefit Packages has over 20 years of experience with California health insurance and can help you weigh your options.