There are times in our lives when we have multiple choices and we happily pick the best option available. However, when it is time to choose the best health insurance plan, the multiple options start creating confusion. With so many options available we feel overwhelmed and find difficulty in picking the best plan to align with our healthcare needs and budget. However, the good news is that buying health insurance is not complicated, because today there are several health insurance portals operating that provide quotes of leading plans from different insurers.
Difference between HMO and PPO Plans
Two of the most popular major medical health insurance plans are Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) plans. The major differences between both these plans are in the size of the network, plan cost, ability to see specialists without referrals, in-network size, and coverage for out-of-network services. The main difference between the two plans is the primary care doctor. With an HMO plan, you will have a primary care doctor from whom you can avail healthcare services, and if you have to see any specialist, then you will need a referral from your primary care doctor. Often HMO plans have lower premiums but every plan is different, so you need to carefully check the plan details to decide between an HMO or PPO plan. However, choosing between an HMO and PPO plan is specific to each individual’s needs.
Additional Key Differences between HMO and PPO Plans
- You enjoy more flexibility in PPO plans in choosing a doctor or hospital and have fewer restrictions on seeing out-of-network providers.
- Some PPO plans also cover the out-of-network visit costs but HMO plans provide coverage for in-network visits.
- HMO plans are considered affordable with lower premiums and a lower annual deductible compared to PPO plans.
- Members of HMO plans require referrals from their Primary Care Provider to visit specialists for non-emergency medical needs, whereas members of PPO plans do not require to choose a PCP.
Key Differences at a Glance
|Choice of Doctors||You need to choose the doctor within the plan-network||You can visit a doctor from outside the network, but will pay more out-of-pocket|
|Choice of Hospitals||You need to visit hospitals included in the plan-network to be covered||You can visit hospitals outside the network|
|Specialists||You will require referral from your PCP to see a specialist||You do not need a referral from your PCP to see a specialist|
|Cost of Plan||HMO plans rarely have deductibles and even copayments are minimum||PPO plans have a deductible and copayments are more compared to HMO|
|Monthly Premium||Though the cost of the monthly premium varies plan to plan but HMO plans premiums are generally lower||The monthly premiums of the PPO are more compared to HMO plans|
|Claims Filing||You do not require to file claims yourself, as it is handled within the network||You are required to file some claims, especially in case when you have received healthcare from outside your plan-network|
Key Features of HMO and PPO Plans
HMO plans provide an entire network of healthcare providers who offer healthcare services to all members of the plan. The healthcare provider network includes a Primary Care Provider assigned to you and your family. Your Primary Care Provider will be responsible for coordinating your health care services, and to provide you referral in case you need to see an in-network specialist.
Another difference between both these plans is their fees. HMO plans require you to pay copayment fees for every non-preventive medical visit and also give you access to in-network doctors and hospitals. The in-network healthcare providers of HMO plans provide healthcare services at lower rates to members while meeting set quality standards. However, if you visit the out-of-network provider, then your HMO plan may not cover the costs of your visit.
PPO plan allows plan members to visit any doctor who is within the insurance company’s network without requiring any referral. The members can even pay a visit to any specialist in the network without obtaining a referral from PCP. Members of PPO plans are not required to choose a Primary Care Provider and have fewer restrictions on seeing out-of-network providers. PPO plans as HMO plans also have copayments on non-preventive medical care. Though many PPO plans have an annual deductible and higher premiums.
Cost Analysis of HMO and PPO Plans
While deciding between an HMO and PPO plan, cost plays an important factor besides benefits.
Though as a PPO member you are free to receive a little bit of coverage outside of your network, but you require to pay a higher monthly premium. Whereas with HMO plans, you cannot receive coverage outside of the network but you have lower premium costs. As the average monthly premium in 2020 for an HMO plan for a 40-year old applicant was $478 and in 2021 the monthly premium of an HMO plan has further reduced to $427. Similarly, the average monthly premium for a 40-year old applicant in 2020 for a PPO plan was $561 and the monthly premium in 2021 for a PPO plan has reduced to $517.
The out-of-pocket costs generally for an HMO plan are lower compared to a PPO plan, and HMO plans even don’t have annual deductibles and you need to pay a copay on receiving healthcare service from an in-network provider. However, PPO often comes with deductibles, coinsurance, and copays. Though, it mostly depends upon your plan, if your PPO plan has only copays then it will work exactly like the HMO plans. You just need to pay a certain amount on receiving medical services. In case if you have a PPO plan with a deductible amount, then you will require to pay a certain percentage for medical services until you meet your deductible amount. After meeting your deductible you will still require to make a copayment at the time of service. Thus, while deciding between an HMO and PPO plan, consider your choice between lower premium and out-of-pocket costs or a less restrictive network for healthcare.
Which is a Better Plan between HMO and PPO?
Both HMO and PPO plans have their own set of pros and cons, it might be really difficult choosing between these two plans. You might always find yourself in dilemma considering which is better between the two. However, no plan can be termed best for all, as there is no “one size fits all” type of plan that will suit all consumers. You need to choose between an HMO or a PPO plan based on your personal preference and your healthcare needs. Albeit, some of the statistics are given below that may help you decide which plan will be best for you:
- PPO plans have higher enrollment compared to HMO plans.
- In the year 2020, around 47% of workers receiving employer-sponsored coverage chose a PPO plan, compared to just 13% of employees who chose an HMO plan.
- A Study of thousands of health plans has shown that HMO plans draw better customer satisfaction ratings compared to PPO plans, despite its popularity among the masses.
How to Choose Between an HMO and PPO Plan?
After a lot of analysis, it has been cleared that HMO plans are best for you if are more concerned about the affordability of the plans, and you should opt for PPO plans if you want to have a bit more flexibility. However, besides this, you also need to consider the factors that are most important to you. While choosing between an HMO and PPO plans following check-points will help you out:
- You will have a lower monthly premium, deductibles, and out-of-pocket costs with HMO plans.
- You will need to have a Primary Care Physician in HMO plans, who will manage all your health problems.
- With a PPO plan, you can have at least limited coverage with an out-of-network provider.
- You can receive limited prescription coverage at any pharmacy with a PPO plan.
- With a PPO plan, you need to file a claim to receive payment of benefits.
Besides the above-mentioned factors, you also need to consider the healthcare options available in your area. If you reside in a rural area where there is not the availability of many physicians within an HMO network, or if your preferred doctor is not part of an HMO network. These factors need to be considered before deciding upon the plan to choose. If you travel frequently, then you may need to see a doctor while out of town and so in such circumstances, you should opt for a PPO plan for the flexibility reason. Some people prefer to have a Primary Care Provider to coordinate and manage all their healthcare, and so that a detailed record of your health history is available with your PCP who can provide you the more personal service each time you pay a visit to the doctor. Even large families find it effective to have a Primary Care Provider and in all these cases an HMO plan will provide beneficial and ideal.
How to Enroll in a Plan?
You can enroll in the plan of your choice during the Open Enrollment Period that comes each year during the fall. You can enroll in an individual health plan during the Open Enrollment Period or in a Medicare plan during the Annual Election Period. Generally, there are four deadlines for health insurance that you need to keep in mind. Though these deadlines slightly fluctuate from year to year, but majorly the deadlines are the same for every year. For instance, the 2021 open enrollment date for ACA plans are:
November 1 – The Open Enrollment starts and you can view the available plans and their prices before enrolling in a plan.
December 15 – This is generally the last day either to enroll in an ACA plan or to make changes in your plans, coverage of which starts on January 1.
Some of the states have extended the Open Enrollment deadlines to January 15 or January 31.
The Annual Election Period for 2021 Medicare Plans are:
- October 15 – The Annual Election Period starts and this is the time when you can enroll in a Medicare plan or may switch from original Medicare to a Medicare Advantage plan or can even switch back to Original Medicare from an Advantage plan.
- December 7 – The Annual Election Period ends on this day and this is the last day for you to make any changes in your Medicare plan that start on January 1.
Decide Between HMO and PPO Plans keeping your Future Needs in Mind
You need to keep your current and future healthcare needs in mind while deciding between an HMO and PPO plan. Besides, you should also weigh the pros and cons of both these plans to make an informed decision that is right for you as well as your family. Before picking any of the plans, you need to check the list of in-network providers for your area. You should check the availability of HMO plans in your local area, and carefully assess your income. You also need to determine if you will need to see specialists in the upcoming year. Careful considerations of all these factors will help you pick between the HMO and PPO plans that will prove the right choice for you and your family.
HMO or PPO, Which Plan is Right?
The major differences between an HMO and PPO plan are in terms of cost, plan-network size, access to specialists, and coverage for out-of-network services. Individuals who are healthy with not many healthcare needs should opt for an HMO plan. However, if you have health issues and require frequent visits to the doctor, then you must be looking for greater flexibility in your plan and hence a PPO plan will be an ideal option for you. Finding out the best and right health plan can be confusing, so you should not shop for a health insurance plan alone and should seek the assistance of health insurance experts who can guide you in picking the right plan for you and your family and allow you save money and meet your health goals.
HMO or Health Maintenance Organization plan gives you access to certain doctors and hospitals within its network who have agreed to render healthcare services at lower rates to the members of the plan. PPO or Preferred Provider Organization Plan also has network of providers, but you have fewer restrictions on seeing non-network providers. However, you will enjoy better benefits if you visit a doctor who is included in the PPO plan network. Thus, the difference between HMO and PPO plans include network size, ability to see specialists, costs, and out-of-network coverage. The cost of HMO plans is less but PPO plans offer greater flexibility and have larger networks compared to HMO plans.
A PPO plan is popular than an HMO plan and this plan is a better choice if you wish to have flexibility in terms of visiting the healthcare provider. As a member of the PPO plan, you have the option to visit both in-network and out-of-network providers, though you will have more benefits on staying within the network. You also have the flexibility to visit specialists without requiring a referral that also includes out-of-network specialists.
HMO plans usually have lower monthly premiums and members are expected to pay less out-of-pocket. Besides affordable premiums, some of the other advantages of HMO plans make them a popular choice. If you are budget conscious and don’t anticipate many doctor visits, then HMO plans will certainly be a better choice. Some of the advantages of the HMO plans that make them popular include:
Yes, both HMO and PPO plans come with a copay, though HMO plans usually require copays for non-preventive care, whereas PPO plans require copays for most of the healthcare services. A copay is a set amount of money that members pay when visiting a doctor or getting a prescription. The copay amount varies based on the healthcare service.
No plan can be termed as best for one and all because it depends upon your preference and healthcare needs. An HMO plan will be ideal and best for you if you visit a single healthcare provider and looking for lower monthly insurance premiums. However, if you require more flexibility and specialized healthcare then a PPO plan will be best for you.