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The Pros and Cons of HMOs versus PPOs

 

Are you searching for a new job? Or are you thinking about a job offer you recently received? If so, employer-provided health insurance is a crucial factor you need to consider. You need to ensure there is a plan offered that will meet the health needs of your family, gives you the option to see your preferred specialists or doctors, and will work with the budget you have for this expense.

One of the most common options that you will have include:

  • The preferred provider organization or PPO plan
  • The health maintenance organization or HMO plan

Keep reading to learn the difference between an HMO and a PPO and what to consider to figure out which option is best for you.

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The HMO Plan Explained

The HMO plan is based on a set network of doctors, hospitals, and other medical care providers who have agreed to coordinate the care provided in the network for a set pay rate for the services provided. There are several HMO providers who are paid based on the members, regardless of how many times they actually see a member. As a result, this makes the HMO plans a more affordable option than the PPO.

Usually, the HMO will only cover the care received from the contracted providers of the plan, which is referred to as an “in-network” provider. If you are covered through the HMO, it may be necessary for you to choose a primary care doctor who can manage your health care needs and who will refer you to specialists in the network when necessary.

Usually, you will have to remain in-network to receive care. However, there are some HMO plans that would refer members to an outside specialist if the care needed isn’t available through the HMO system. It’s also possible for HMO members to receive care at the nearest ER.

The Advantages of the HMO Plan

It is the many benefits offered by HMO plans that make them a popular option if you have al limited budget, or if you don’t anticipate needing much medical care. For example, it offers much lower monthly premiums and will usually provide you with lower out-of-pocket costs. Prescriptions usually cost less, and you don’t have to file claims as often because medical care is usually in-network.

The Potential Disadvantages of an HMO Plans

There are potential downsides to the HMO. It makes you remain in-network to receive care, unless it is a true emergency situation. Also, if your existing doctor isn’t in the HMO network, you must find a new primary care provider.

The PPO Plan Explained

PPO plans have been created to offer more flexibility when it comes to selecting what health care providers you see. Usually, care with this plan is much more affordable if you stay in-network. However, if there is a doctor you would rather see, it would likely be easier to do so if you have a PPO plan.

The Benefits of PPO Plans

PPO plans are a better option compared to HMOs if you are looking for flexibility regarding the health care providers that you see. They offer you the flexibility of going to a provider who is both in- or out-of-network. Also, you can typically visit a specialist with no referral, which includes an out-of-network specialist.

Potential Disadvantages of the PPO Plan

Usually, the PPO is going to come with higher monthly premiums, along with more out-of-pocket costs than what is paid for an HMO plan. Also, you have a higher level of responsibility to manage and coordinate your care if you don’t have a primary care provider.

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Is the HMO or PPO the Better Option?

Making the decision between an HMO and a PPO is a decision that needs to be based on what is most important to you and your family – the cost of the plan or how flexible it is regarding the care you receive. In some situations, the HMO plan may be a smart option if you need lower costs and if you don’t mind having to choose doctors from the in-network options.

With the PPO, you can keep your current doctor and keep seeing the specialists you prefer. Usually, this plan comes at a higher price point, but puts you in charge of your health care.

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