HMOs or PPOs?

In case you have the possibility to opt for employer-sponsored group health plan there's a really important decision to be taken. Most employers, especially big companies or small businesses within purchasing pools, offer their workers a wide range of plan types, which typically include both HMO and PPO health plans. Being the most popular of all plan types, these two have distinct features, and understanding the difference between them is really important for having adequate insurance coverage for you and your entire family. So let's take a closer look at each to have better knowledge of pros and cons they deliver.

HMOs

Health Maintenance Organization (HMO) is an alliance of medical workers and facilities (doctors and hospitals) that have a contract with the insurance company for providing their services for a fixed price.

HMOs are generally regarded as having many rules and restrictions for their users. The person having an HMO plan is required to choose a single physician who will be responsible for all your healthcare matters. The primary physician should be a member of the HMO network, which means if your current doctor doesn't make part of the association then you will have to find another one who does. In case you have to visit a specific specialist, you will first have to visit your primary doctor for a referral, otherwise you won't get the care you need.

The definite benefit of an HMO plan is its price. It is much cheaper than any other health insurance plan type, having lower rates, premiums and typically free co-payments. This is a very attractive option, however you have to keep in mind that first of all there's not much flexibility involved with HMOs, and doctors participating in them will usually have more visitors because they have to make up the low cost of the plan by servicing more people and get profit from that.

PPOs

Preferred Provider Organization (PPO) are also contractually bound to health insurance companies, but in a less restricted and organized way, giving much more flexibility to participants and users in comparison with HMOs.

Having a PPO plan allows you to see any doctor you wish to, however out-of-network doctors will cost you more to attend and will require more out-of-pocket spendings. PPOs also leave you without having to worry about referrals for seeing a specialist.

From the price perspective, PPOs are more expensive than HMOs. Still many people choose PPOs because their less restrictive nature and wider selection of specialists to attend if compared to HMOs.

You get what you pay for

If your financial situation is not that good it would be better to choose an HMO plan, because it's cheaper and minimizes your out-of-pocket spendings. However, if you want a wider selection of doctors and facilities under your health insurance plan, then you will have to pay more for a PPO plan.

Selecting your physician

The established relationship between you and your family doctor also plays an important role in choosing between different plan types. If you are confident in your current doctor who has been managing your healthcare for years, and the specialist doesn't make part of the HMO network, it will be better to get PPO health coverage. In case you're not that attached to your current physician you can easily choose between PPO and HMO according to your financial situation. In either case, it is much better and wiser than having no insurance at all. So choose carefully.