HMO vs PPO – Choose Your Ideal Insurance

The cost of medical care in today’s world keeps rising. It is becoming more and more difficult for people to deal with the expenses that come with it. Hence, health insurances are becoming increasingly common around the globe.  There are many levels of health insurance that offers different packages. The potential subscriber can choose what package is best for them by checking the specialists, hospitals and medical facilities that are a part of each package. HMO and PPO are two types of organizations that provide health insurance.

What is an HMO?

The Health Maintenance Organization (HMO) forms a large network by teaming up with hospital and healthcare providing centers and facilities. The purchasers of the health insurance provided by this organization can access all the medical facilities that are a part of this network. The premiums can either be paid on a monthly or yearly basis. HMO’s are usually what major companies subscribe to provide their employees with medical insurance. In order to benefit from their health insurance, the insured person must only get medical care from doctors or specialists that are contracted by the HMO.  There are many levels of health insurance that offers different packages. The potential subscriber can choose what package is best for them by checking the specialists, hospitals and medical facilities that are a part of each package.

Aside from the annual or monthly premium, for almost every doctor’s consultation session, prescription or test, the insured person has to make a ‘copayment’. The copayments are a very small amount, usually not more than $5-$10 which is a lot less than how much the facility would cost without a health insurance. HMO is ideal for people who require costly medical attention. The monthly fee and copayment would be far less than what it would cost to pay for the medical care from their own pocket.

What is a PPO?

A Preferred Provider Organization (PPO) is also an organization that provides health insurance plans. PPO is quite similar to HMO except for certain differences. This organization forms networks of medical facilities, doctors, and hospitals by signing contracts with them. Some insurance packages of PPO does not even require you to select a PCP. If you do select a Primary Care Physician, you can consult them for a health issue but you do not need his or her referrals in order to consult any other doctor. However, for treatments, prescriptions or tests that are very costly, the insurer requires filing for an approval from the PPO before the procedure or the purchase. This can include CT Scans, certain blood tests, and medicines as well. 

HMO vs PPO

The one drawback with HMO is that it requires you to appoint a Primary Care Physician (PCP). This is your main doctor who you will consult for all your health issues. In case you require medical attention that is out of your PCP’s expertise, they will provide you with a referral for another doctor who can help you and is in your HMO network. The insured person cannot consult another doctor without the referrals. However, this rule does not imply in certain cases. For example, an insurer does not need referrals to consult doctors in case an emergency occurs. Whereas, with a Preferred Provider Organization, you can choose to consult your PCP or any other doctor from within the network. Insurers of PPO do not require referrals from the PCP to enable them to consult other specialists. This is a major difference between HMO and PPO.

Another crucial point in HMO vs PPO is the limitations in choosing the specialists. If the subscribers of the Health Maintenance Organization choose to consult a doctor outside of the HMO network, they receive no coverage. On the other hand, if the subscribers of the Preferred Provider Organization choose to consult a doctor from outside the PPO network, they do get coverage. However, the coverage is slightly lower than the coverage they would get whilst consult a doctor from within the PPO network. 

Getting the prescribed medicines can be difficult for HMO subscribers as it has to be done only from pharmacies located within the network. If medicines are purchased from any other pharmacy, the insurance does not pay for it. PPO subscribers are paid some reimbursement if they purchase the prescribed medicines from a pharmacy that isn’t a part of the PPO network.

Given the extra benefits that come with a Preferred Provider Organization, its insurance policies cost the subscriber more than a Health Maintenance Organization would. PPO has been common amongst people for a long time. A recent study shows that due to the cost of PPO, more and more citizens are opting for HMO, making it increasingly popular. Hence, it is up to the insurance buyer to decide which type of health insurance seems to be ideal for them.