HMOs and PPOs are two different types of health insurance. Though they have some similarities, the differences are often confusing. PPO insurance plans offer a wider variety of coverage than HMOs, but are often more expensive. Failure to choose the right type of health insurance for your individual needs could result in you paying too much or not having enough coverage.
What is an HMO?
HMO stands for Health Maintenance Organization. According to Financial Web, HMOs are prepaid health plans where the insured gets to visit a primary care physician, who has a contract with the HMO. The insured person may only go to the primary care physician, or to other specialists that the primary care physician refers the insured person to. The insured may change primary care physicians, but can only visit the one they are currently assigned to.
What is a PPO?
Preferred Provider Organizations, also known as PPOs, involve a network of different health care providers that the insured person can choose to go to. Instead of paying up front, members of PPO plans usually pay for services as they use them, according to Financial Web. Members of PPOs may choose from a variety of health care providers which are included under the PPO plan, or may even find a health care provider outside of the PPO plan, provided that the member pays an additional cost.
Popularity
Consumer Reports states that PPOs are slightly more popular among Americans than HMO health care plans. They state that in 2005, about 55% of all workers in the United States had PPO insurance plans. Some job benefits provide for the employee to choose either an HMO or PPO, while others only provide for one type of coverage.
Cost
According to Consumer Reports, people who are enrolled in HMOs usually pay lower premiums and have fewer out-of-pocket medical expenses than those who are enrolled in PPOs. This is because the options for medical professionals to see are limited with an HMO. PPOs offer more choices, but also higher fees.
Which is Better?
Neither an HMO nor a PPO health insurance plan is necessarily better overall. Weigh the positives and the negatives of each type of plan in order to decide which would be more appropriate for you. Someone with very few health concerns and who rarely visits the doctor may want to save money by choosing an HMO. Someone with several different medical problems may want access to more medical professionals by purchasing a PPO plan.
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