What is the Difference between PPO and HMO Health Insurance Plans?

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When you select a health insurance plan one of the biggest decisions you will have to make is whether to go with a PPO or an HMO plan. Both types of plans will provide you with the basic healthcare coverage you need, however there are some key differences between the plans that you should be aware of. Many people who are looking into health insurance wonder which of the two is the best. One type of plan isn’t necessarily better than the other, as both have their advantages and disadvantages. 

Read on to learn what PPO and HMO health insurance plans are, as well as examine their pros and cons. 

What is a PPO Health Insurance Plan?

The PPO health insurance plan stands for Preferred Provider Organization. It provides you with a large network of doctors, hospitals, and medical providers. When you need to visit someone from the network, you don’t need a referral from a primary care doctor. Of course, you can still visit a doctor that is out of the network, however your insurance will cover significantly less of the costs, or not cover the service at all, compared to if you were to visit a doctor or hospital in your insurance network.

Advantages to PPO Plans

PPO plans offer choice and flexibility. The biggest advantage that a PPO health insurance plan has, is that it offers you greater choice in what doctors you can visit. As long as the doctor is in your insurance network and accepts your insurance plan you can see whichever doctor you choose. PPO plans typically have larger networks than HMO plans, giving you a greater selection of in-network doctors and hospitals.

Another advantage of a PPO plan is that you do not need a referral to see a specialist. Typically with an HMO plan you would first need to see your primary care physician who would then refer you to the appropriate specialist.

Disadvantages to PPO Plans

PPO plans cost more than HMO plans. Due to the fact that you have greater choice in what doctors you are able to see and typically do not need a referral to see a specialist your monthly premium will be higher with a PPO plan than with an HMO plan. In addition to monthly premiums, you will usually also have to pay a deductible for medical services. It’s important to be aware that if you choose to see a doctor or got to a hospital or facility that is outside of your insurance network your insurance will not cover as much of the costs as if you were to select an in-network doctor, specialist or hospital. Coverage for in-network providers will always be much better than out of network providers.

What is a HMO Health Insurance Plan?

The HMO health insurance plan stands for Health Maintenance Organization and has a smaller network of doctors, compared to a PPO network. In this plan, you first need to select a primary care physician. If you need to see a specialist you will need to get a referral from your primary car doctor.

Advantages to HMO Plans

If affordability is your main concern than an HMO plan is a great option. An HMO health insurance plan is a more affordable option than a PPO plan, as it has lower monthly premiums. Additionally, there is usually no deductible or a very low one.

Disadvantages to HMO Plans

While you will save money with an HMO plan you will lose the flexibility and choice that you get with a PPO plan. HMO’s typically have smaller networks of doctors and hospitals than PPO plans. With most HMO plans you will be required to select a primary care physician who will be your first point of contact for all treatment. If you need to see a specialist you will first need to get a referral from your primary care doctor. Another point to be aware of is that HMO plans almost never offer out-of-network coverage. Meaning that if you see a doctor that is out-of-network your insurance will most likely not cover the costs. The only time out-of-network services may be covered is for emergencies.

It is important to understand the key differences between PPO and HMO plans in order to make the best decision on a plan that meets your needs. When researching health insurance it’s best to check the provider network to see if your preferred providers are in the network as staying in-network will save you the most money.