Individual Health Coverage : Choosing Between HMO and PPO



Most individuals who have health insurance have either a PPO or an HMO. These two types of plans are the most common among managed care plans. When it comes to choosing individual health coverage, understanding the differences of these plans can be valuable knowledge for choosing the right plan to fit each individual’s needs.

HMOs

Health maintenance organization or HMO’s are managed care plans that offer a network of providers. Insured individuals are required to choose a primary care physician who will provide and coordinate all the individual’s health care. When the need for a specialist is required, a referral from the primary care physician must be obtained. If choosing a doctor or specialist outside of the network, costs are normally not covered by the HMO.

PPOs

A PPO or preferred provider organization is a health insurance plan that works with a group of preferred providers that individuals can choose from. No primary care physician needs to be chosen and no referrals are needed for specialists as long as they belong to the network of preferred providers. When receiving care from a network doctor, patients are required to cover annual deductibles and a copay for each visit. If choosing a doctor outside of the network, costs will be higher, full payment is required directly to the physician and a claim must be filed with the PPO for reimbursement.

Payment Differences in PPOs and HMOs

Participants of HMOs pay co-payments for charges of in-network services such as doctors visits, prescriptions and other medical procedures. Participants of PPOs also make co-payments although some PPO plans also require an annual deductible. PPO plans tend to cost more because of the flexibility with doctors and hospitals.

Choosing The Right Plan

When deciding on whether to choose individual health coverage with an HMO or PPO, many individuals prefer a PPO as if offers more freedom to choose doctors and hospitals where as HMOs have stricter rules in choosing both physicians and hospitals. HMOs tend to be more cost efficient than PPOs.




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