The Difference Between PPO and HMO Health Insurance Policies
Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO) are two types of managed healthcare systems that have many similarities and differences. Knowing and understanding these characteristics is crucial to making the important decision of what insurance policy is well suited for your family or employees.
Other People Are Reading
-
Function
-
Both of these insurance policies attempt to reduce healthcare costs while providing excellent access to quality medical professionals. Many organizations do not offer employees different insurance options. If a company does allow employees a choice, it is usually between an HMO insurance policy and a PPO insurance option. If given the opportunity, employees should select the policy that best fits their health needs and desired out-of-pocket expenses.
HMO Health Needs
-
With an HMO plan, members are required to choose a primary care physician from the HMO list. This primary physician is the first contact for medical needs and must be consulted before referring the member to a specialist within the HMO network. The size of the network depends on the specific HMO policy.
-
PPO Health Needs
-
The biggest difference between the two policy options is that the PPO insurance policy offers greater flexibility in choosing doctors, specialists and hospitals than the HMO insurance option. A PPO plan doesn't require a referral from a physician to see a specialist as long as the specialist is part of the preferred provider list.
HMO Costs
-
The out-of-pocket personal expenses and costs are another main difference between the policy options. All HMO policy members pay a low fixed monthly cost and are only responsible to pay a minimal co-payment for each doctor or hospital visit. Unlike other insurance policies, HMOs do not have a minimal deductible to meet. With these reduced costs, HMOs encourage and focus on preventative care and early medical treatment. Also, HMOs do not have a limit or maximum on lifetime benefit payouts so members are covered for life no matter the circumstances.
PPO Costs
-
A PPO plan is more costly for policy holders due to the larger co-payments and the deductible payments they are required to meet. A deductible payment is the amount of money the policy holders must pay before the insurance coverage kicks in. This protects insurance companies from paying out on small claims. Higher regular payments, called premiums, result in lower deductibles and vice versa.
Considerations
-
If someone with a PPO policy chooses a doctor or hospital outside the extended preferred provider list, the PPO will still pay up to 80 percent of the expenses. A HMO requires policy holders to only see doctors on the list and will not pay for expenses outside its network of providers.
-
