What Is the Difference Between an HMO and a PPO?

Choosing the right health insurance plan can be a challenging decision. Knowing how different plans work can help relieve some of the stress, so it's important to know the difference between an HMO and a PPO.

Description

HMOs and PPOs are two common types of managed-care health insurance plans.

Types

An HMO (health maintenance organization) requires the participant to see a primary care physician (PCP) within the insurance provider's network. This doctor will be in charge of all the patient's medical care and will refer the patient to a specialist if necessary. A PPO (preferred provider organization) gives the participant the flexibility to see any physician he or she chooses. This plan does not require a PCP.

Coverage

HMO plans will typically not cover any expense that is incurred outside of the provider's network and that lacks prior authorization from the primary care physician, with the exception of urgent care. PPO plans have a list of preferred providers, but the participant is not required to stay within the network to have costs covered.

Benefits

Enrolling in an HMO plan is cost-effective. The premiums are lower, do not require a deductible to be met and the co-payments (the participant's contribution) are reasonable. A PPO is more expensive because it offers more flexibility and has fewer restrictions.

Considerations

Taking time to research each plan's pros and cons will help make the decision process easier when deciding which to choose.

References

• ConsumerReports.org: How to Choose Health Insurance
• Lymphomation.org