You’ll find many health insurance plans to be attractive in many ways, but there are also things you prefer to not have, such as unneeded coverages or high premiums. If you find it difficult to decide on a health insurance plan, it’s a very common situation for consumers. You can narrow down your search, however, by knowing the differences between Health Maintenance Organization) HMO and (Preferred Provider Organization) PPO plans.
Once you learn about both types of plans, it can help you choose one of many different family healthcare plans that you may qualify for. While both of these plans involve networks, one of the biggest differences between the two are the out-of-network services they offer. Here is a quick breakdown of both PPO and HMO plans.
About Health Maintenance Organization Plans
HMO plans are types of network plans designed to give you accessibility to hospitals, doctors, and services that work closely with your insurance provider. Healthcare providers can join one of these HMO networks by having all the required credentials needed in addition to agreeing to the HMO plan’s terms, which can vary from network to network. One of these terms is typically charging the patient less for services than normal. Doctors agree to this if it means that that doctor can receive more clients.
However, HMO networks may not be as competitive as you might assume. There happens to be a limit for the amount of providers that do business in certain regions. This makes the chance of patients choosing a new insurance provider to be small. These patients also might be content with the affordability that comes with an HMO plan, so more often than not, patients tend to stick with the most valuable plan within their reach, unless something even better might come along.
In an HMO plan, the patient, however, must be referred to a certain doctor before the patient can visit that doctor. There are also restrictions on how often the patient can schedule doctor visits for things like tests and procedures. Insurance providers can also refuse to pay for services that patients get outside their network, which can be discouraging for patients.
About Preferred Provider Organization Plans
Compared to HMO plans, PPO plans offer more flexibility for the benefit of patients. Like HMO plans, PPO plans consist of networks with a list of participating hospitals and physicians. The difference is, if a patient wants to receive treatment outside the network, a PPO plan has a better chance of covering those expenses. Similar to the HMO plan, however, the patient must be referred to the doctor first before an appointment or procedure can take place.
The disadvantage of a PPO plan is that they’re often pricier month-to-month compared to the HMO plan. While the insurance can pay for medical bills that occur outside the network, the provider will tell you you owe them money for it. Additionally, out-of-network costs might not go towards the out-of-pocket maximum limit, so it often makes better sense for patients to choose an HMO plan if spending less is a priority to them or they do not have a preference of a certain doctor.
HMO and PPO plans have many similarities and differences with one another. HMO plans are often affordable, but expenses outside the network won’t be covered by your insurance. PPO plans are more flexible in which insurance might cover out-of-network expenses, but is pricier, and the provider might charge you for it. These are the biggest differences when considering either a PPO or HMO plan.