Whether you’re buying health insurance from your state’s marketplace, an insurance broker or selecting a plan offered by your employer, chances are you’ll have multiple plans to consider. Two of the more common include health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Here’s a closer look at how each works and how they differ from each other.
How Do HMOs Work?
An HMO is more limited in scope, as the coverage allows you to see doctors within your network only. How it works is you’ll visit your primary care physician. From there, they’ll refer specialists within your network. With HMOs, you must receive a doctor’s referral to receive coverage when visiting specialists.
However, if you decide to visit a doctor that isn’t within the network’s coverage, you’ll have to pay all costs associated with the visit(s). Your HMO won’t reimburse you since you chose an out-of-network provider.
How Do PPOs Work?
With PPOs, you have two options when it comes to seeing doctors: you choose healthcare providers within your insurance’s network or if availability is an issue, you’ll see doctors out-of-network.
The main difference is when you visit an in-network doctor, the insurance assesses a lower cost whereas if you choose an out-of-network physician, you’ll do so at a higher cost. In the case of out-of-network doctors, you pay the fee first then send the bill to the insurance company. Next, the insurance reimburses you the cost of the visit provided it exceeds your copay or coinsurance.
How Are They Different?
One of the biggest differences between HMOs and PPOs concerns availability. With HMOs, you have limitations in who you can see. If a doctor isn’t in your network, you can visit, but you are liable for the cost. Meanwhile, with PPOs, you’ll have greater flexibility in who you can see as you have access to in-network and out-of-network options.
Another difference pertains to cost. PPOs are much more expensive than HMOs. Therefore, availability of healthcare and budgetary concerns are the main influential factors in determining care.
In the meantime, if you would like to explore other insurance options or receive a fresh perspective on your current policies, feel free to contact an independent agent at Cole Harrison.