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HMO Plans: Are They as Good as PPO Plans?

If you're shopping for health insurance, chances are you've come across HMO plans. How do they stand up to PPO policies?

Most people will consider purchasing health insurance to cover the potential costs of medical bills and there are a variety of options available. Two of the common choices are Health Maintenance Organizations (HMO Plans) and Preferred Provider Organizations (PPO Plans), and these are managed care plans which contract with a range of medical facilities to provide care to those covered by the insurance. So if you decide to choose one of these two options which should you go for?

What is a managed care plan?

A managed care plan is essentially a type of health insurance, where those enrolled in the plan have a network of care providers that can provide them with medical services. A network can include physicians, hospitals, healthcare clinics and other medical outlets such as testing laboratories and pharmacies. Typically, those that invest in managed care plans have to use the network of care providers included in the plan and therefore, prior to signing up to a plan it can be an important step to check the medical facilities included to ensure that they are likely to suit your requirements. In some cases it is possible to use healthcare providers out of the network, although this needs to be checked with an insurer prior to doing so to make sure it is possible to claim for the costs through your existing insurance. Managed care plans are typically available through group and individual insurance.

Features of HMO Plans

HMO plans typically have a specified network of care providers and when you sign up for this type of plan you have to nominate a Primary Care Physician (PCP). The PCP is basically your first point of contact for any medical care and whenever you need to see a doctor, the PCP is who you would visit. To have healthcare provided by one of the other facilities in the network, it is necessary to get a referral to them from the PCP. Women who sign up to an HMO Plan can also typically specify a primary doctor to provide them with gynecological and obstetrician care.

Pros and Cons of HMO Plans

There are a few benefits to choosing an HMO plan. They are a type of health insurance that typically offers the lowest cost of premiums. They typically have a low deductible and in the case of many plans, no deductible. They also generally feature lower copayments. However you are restricted to seeing your PCP in the first instance and need to get a referral to see another care provider in the network and this can mean a longer wait for treatment. An HMO plan also generally does not pay for treatment from healthcare providers outside of the network.

Features of PPO Plans

PPO plans are similar in some respects to HMO plans, in that they comprise a network of healthcare facilities that provide care to those covered by the insurance. However the major difference with a PPO plan is that you do not need to nominate a primary care physician. Those that are insured are typically free to visit the medical facilities in the network that they feel best suits their needs, without specifically needing a referral.

Pros and Cons of PPO Plans

The main advantage of a PPO plan is that you are free to visit any of the medical facilities in the network and this can reduce the time required to receive treatment. A few plans will also pay some of the costs for a visit to a healthcare provider outside of the network, although this should always be checked before doing so. However the premiums are generally more expensive for PPO plans in comparison to HMO plans. A PPO plan also usually has an annual deductible, with the cost of this having to be met before the insurance starts to pay.

Which to Choose?

Both HMO and PPO plans can provide decent health insurance and the choice of one or the other will typically come down to personal preference and the circumstances of an individual. Those looking to have more affordable insurance will likely find an HMO plan the better choice, although if you want a little more flexibility in visiting a healthcare provider and getting quicker treatment, a PPO may be the better option.

Those looking to invest in health insurance will find that HMO plans and PPO plans are a couple of the most common options available to them. Both have pros and cons and it generally comes down to the individual to make a decision as to which of the advantages best suits their needs.

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