How to Research Actual PPO & HMO Group Health Insurance Plans

Evaluate PPO and HMO plans by comparing their benefit summaries.

Whether you’re a business owner investigating group health insurance for your employees or an employee presented with multiple group policy options, it’s essential to understand the differences between PPO and HMO plans. In addition to evaluating the monthly premium for coverage under a PPO or HMO insurance program, you must consider the features and characteristics of each plan and how out-of-pocket costs for treatment will affect your situation.

Instructions

1. Choose plans to evaluate. Insurance carriers typically have multiple HMO and PPO plans from which to choose, and to properly research the policies you must first understand the generic differences between the two types of plans.

2. Request benefit summaries. If you’re an employer investigating new health insurance for your workforce, contact the health insurance carriers in your local area and request complete benefit summaries for their HMO and PPO programs. If you’re an employee of a company offering both HMO and PPO plans for workers, contact your employer’s Human Resources department and request copies of the benefit summaries. These documents make researching HMO and PPO group health insurance plans easier and more efficient.

3. Examine provider networks. HMO and PPO plans are both designed around a network of participating physicians and facilities, by whom the bulk of services are provided. Contact the health insurance company or visit the carrier’s website to obtain a list of the participating providers. Scan the list to ensure that your family doctor and any specialists you expect to visit are in-network. Remember that HMO and PPO plans might reduce or even prohibit payment for services rendered by physicians outside the network.

4. Examine office and specialist co-pay amounts. Plan benefit summaries detail the per-visit amount required for seeing your family doctor or a specialist. These amounts commonly differ, and researching the HMO and PPO plans allows for easier comparison of policy features.

5. Examine prescription medication costs. Most health insurance carriers have a three-tier prescription benefit on most HMO and PPO group policies. Generic medications cost the least, common brand-name medications cost slightly more and non-formulary medications are the most expensive. Non-formulary medications tend to be drugs that are less common, rarely used or very new. Every insurance carrier can provide a formulary list detailing the tiers into which medications fall, allowing you to estimate your expenses for various plan options.

6. Examine in-patient and out-patient costs. Properly researching HMO and PPO insurance plans should largely include an analysis of the out-of-pocket costs for in-patient hospital treatment and out-patient surgical center treatment. Some HMO and PPO plans have comprehensive coverage that results in no cost to patients for either service, while other policies leave patients responsible for large portions of the total bill.

7. Examine deductibles and co-insurance. Both HMO and PPO health insurance plans might contain deductibles and co-insurance amounts, characteristics designed to reduce the monthly premium for coverage. Deductibles are amounts that patients must pay before the insurance company contributes toward medical costs. Formerly, only PPO plans usually had deductibles and enforced them only for out-of-network services. However, many carriers now offer an in-network deductible on both HMO and PPO policies as another method of premium reduction. Co-insurance, short for “cooperative insurance,” refers to the percentage of total treatment costs paid by the insurance carrier. After the patient fulfills the deductible, the insurance company pays only the specified percentage, or co-insurance amount, leaving you responsible for any remaining balance.

8. Examine maximum out-of-pocket amounts. Every group health insurance plan contains a maximum out-of-pocket figure intended to protect you against enormous medical bills beyond your financial capabilities. Once your total medical expenditure meets or exceeds the maximum, as defined in the policy’s benefit summary, the insurance company covers all remaining treatment costs . Researching HMO and PPO group health insurance plans requires serious consideration of the maximum out-of-pocket figure, as this is sometimes as high as $10,000 or $15,000.

References

• National Association of Health Underwriters: Consumer Guide to Group Health Insurance
• HMOvsPPO.org: HMO vs. PPO Comparison

Resources

• Health Insurance Resource Center: How to Evaluate Health Insurance Companies
• Colorado Health Insurance Insider: What to Look For When You Choose a Health Insurance Policy