HMO or PPO – Which Is Right For Me?

There are a lot of decisions to make when it comes to choosing a health insurance plan. One of the first decisions you will need to make is what type of policy is best for your current situation.

You’ve probably heard the terms HMO (health maintenance organization) and PPO (preferred provider organization), but what’s the difference between the two?

HMOs have a network of doctors, hospitals and other healthcare providers who provide their services for a specific payment. This allows the HMO to maintain the lowest possible costs for its members.

HMO plans typically have lower monthly premiums. You can also expect to pay less out of pocket, but you will be limited to doctors within your network, specialist visits require a referral and many prescriptions for common conditions, such as migraines, require prior authorization.

With most HMO plans, all of your healthcare services, referrals and prior authorizations are coordinated by your designated Primary Care Phyisican. HMOs don’t offer coverage for care from out-of-network healthcare providers. The only exception is for true medical emergencies.

Since HMOs only allow you to visit in-network providers, it’s likely you’ll never have to file a claim and your insurance company will pay the provider directly.

A PPO offers you a network of healthcare providers to use for your medical care at a negotiated rate. However, unlike an HMO, a PPO offers you the freedom to receive care from any healthcare provider — in or out of your network and a referral is typically not required.

PPOs tend to have higher monthly premiums, but in exchange they allow you the flexibility to use providers both in and out of network without a referral. Out-of-pocket medical costs can also run higher with a PPO plan since referrals and prior authorizations are not required.

PPO plans do not require referrals and you are not required to coordinate care through a Primary Care Physician. With a PPO, you have the flexibility to visit providers outside of your network. However, visiting an out-of-network provider will include a higher fee and a separate deductible. In some cases, you will have to pay for services directly and then file a claim to get reimbursed. This is most common when you seek services from out-of-network providers.

An HMO might make sense if lower costs are most important and if you don’t mind using a PCP to manage your care. A PPO may be better if you already have a doctor or medical team that you want to keep seeing, but who is not part of your network.

If you’d like to talk about your health coverage options, or you’re ready to sign up for a plan, please reach out to us at (760) 271-6651 or via email.