Pros and Cons Of HMO and PPO Health Plans

Pros and Cons Of HMO and PPO Health Plans

A comprehensive yet affordable health insurance plan for you and your family is a must-have. Yet, when it comes to the open enrollment season, the majority will overlook the negatives and opt for the cheapest choice. It’s crucial to understand the finer details and those pesky acronyms if you want to find the best deal.  

The most important thing to know when it comes to your health insurance package is what exactly it covers. There are two main categories of managed health insurance, known as HMO and PPO. 

HMO is short for Health Maintenance Organization. HMO coverage will restrict you to a particular network of physicians. Health care is guaranteed to be covered under HMO insurance (not including any co-payment agreement). 

PPO stands for Preferred Provider Organization. With PPO coverage, you can approach any physician you desire inside the network and some outside. With this freedom, you’ll still get a level of insurance coverage depending on the situation.  

Now you’ve got the basics and can understand the difference between a PPO and an HMO, it’s time to delve a little deeper. Below we’ve explored the pros and cons of each so that you can figure out which plan suits your needs and preferences.

About HMO Plans 

The most apparent advantage of the HMO plan is that your medical expenses will be covered at a set price. You’ll only be required to pay your co-payment fee. There are some exceptions to this; however, so it’s best to discuss the limitation with your healthcare provider. 

Another essential factor of an HMO plan is that it’s your responsibility to select a PCP (Primary care provider). Doing this comes with its set of positives and negatives. 

By having a dedicated PCP, you can benefit from a sole professional managing and coordinating your healthcare. Being able to see the same doctor allows you and them to build up a sense of trust while understanding and tracking your health more effectively. 

On the other hand, if your preferred doctor isn’t in the insurance network, then you’ll have to move physicians. To receive care from other specialists, you must get a referral from your PCP. Waiting for referrals can slow down the process. 

It’s also worth noting that HMO plans may not be appropriate for those who travel often. Due to the restrictions on only seeing your PCP, your insurance may be at risk if you have to see a doctor outside of your city. The only exceptions in this scenario are if it’s emergency care.

About PPO Plans

PPO plans are the polar opposite of HMO packages. A PPO plan allows you to see whoever you wish and for whatever you want. You can choose between professionals in the network or outside for your health care needs. The latter is more expensive, and in general, the price tag for each visit can vary widely depending on several variables. 

When signing up for a PPO plan, there’s no need to worry whether your physician is in the network or not. You have the option to continue seeing them regardless. With your PPO plan, you have the freedom to go above your PCP and book specialist appointments.

Travel and time away from home is not an issue with a PPO plan either. The flexibility allows you to visit other professionals out of town and out of state if you need to. For those that travel for work or like to vacation, the PPO plan is often their go-to for health care insurance. 

The biggest negative for a PPO plan that scares many average households away from taking out this type of coverage is the deductibles. There’ll be set deductibles that you must meet before the insurance will payout. With a PPO plan, you’ll still be accountable to pay a percentage through your co-pay agreement.

In Summary

All in all, the HMO is much more restrictive than the PPO plan. Yet, with restriction comes lower premiums. Choosing a PCP and allowing them to manage your health care will drop the deductibles. It will also keep you within a network of affordable professionals. 

The PPO plan grants you freedom of choice; necessary for those who spend little time near their PCP or desire treatments that may not be deemed necessary. The cost of this freedom can vary greatly. PPO plan holders will have to pay deductibles and copayments.

Now that you know the ins and outs of HMO and PPO plans, you can make a more informed choice during open enrollment.