Health insurance HMO vs. PPO What is the difference and which is better?

The comparison of HMO vs. PPO It is very common when looking for the best health insurance in the United States since these are the two most popular types of plans.

In the US health care insurance market, people who could afford health insurance but chose not to buy it had to pay a fee called “Individual Shared Responsibility Payment” (Individual Shared Responsibility Payment) when they filed their federal taxes.

Starting with the year 2019, for which taxes must be filed before April 2020, the Shared Responsibility Payment.

Some states have their own individual health insurance mandate, which requires someone to have qualifying health coverage or pay a fee with their state taxes.

If you live in a state that requires health coverage and you don’t have it, or an exemption, you’ll likely be charged a fee when you file your state taxes, but you will not have to pay a fee on your federal income tax return.

HMO vs. PPO health insurance

Health care plans try to cut costs without sacrificing quality of care. With the growing need for health insurance plans, so-called HMOs and PPOs have gained popularity over traditional plans, where coverage is provided regardless of the provider or hospital used.

The acronym HMO stands for Health Maintenance Organization or, in Spanish, «Health Maintenance Organization», while PPO stands for Preferred Provider Organization or, in Spanish, «Organization of Preferred Providers».

The main differences between the two plans are cost, the size of the plan’s network, your ability to see specialists, and coverage for out-of-network services.

When choosing a plan, you should consider the total health care costs, not just the monthly premium you’ll pay to an insurance company each month. The premium is important, but there are other expenses that can affect the total cost of your medical care, beyond the monthly premium.

Among the expenses to consider are the deductible, the copays and the coinsurance, and if there is a consumption maximum in your plan.

The deductible it’s the amount you have to spend for covered services before the insurance company puts in a single dollar (except for free preventive services like an annual physical).

The copays and the coinsurance They are payments you make whenever you receive a medical service after you have met your deductible.

And the maximum “consumption expenses” it is the most you can personally spend for covered services in a year. After reaching it, if your plan has one, the insurance company will pay 100% of the covered services.

HMO vs PPO: the prices

For starters, HMO premiums are typically lower than PPO premiums. But the provider network will be more restrictive and you will have to coordinate care through a primary care physician (PCP).

According to the 2018 Kaiser Family Foundation Health Benefits Survey, published in October 2018, the median monthly premium paid by companies of all sizes for a single-person HMO was $572, and for a family, it was $1,620, with average annual premiums of $6,869 for an individual and $19,445 for a family.

For a PPO, the average monthly premium paid by businesses of all sizes was $596., and for a family, $1,694, with average annual premiums totaling $7,149 for an individual and $20,324 for a family.

In addition to lower monthly premiums, HMOs generally have the lowest out-of-pocket costs. Depending on the details of the HMO plan offered by a particular company, may have a low deductible or even no deductible.

But, if you use a provider that is not part of your HMO’s network, be prepared to pay 100% of the cost.

Primary attention doctor

some plans of HMO require you to choose a primary care physician (PCP). The PCP is usually part of a medical group or hospital system. Restricting PCP visits is one way HMOs cut their costs as they will only provide access to specialty care if it is medically necessary.

Deductible and copay

Health maintenance organizations, while often having no or low deductible, often require co-pay fees for non-preventive visits.

A PPO, on the other hand, allows members to see any network health care provider, without an order or authorization.

If your individual situation requires regular visits to specialists, this makes a PPO a better option than an HMO, as there is no PCP requirement for visits. And there are fewer restrictions on seeing out-of-network providers.

Regarding non-preventive medical care, as well as HMO plans, the PPO plan will typically have copays. but a plan PPOYou will also likely have higher premiums and annual deductibles.

HMO vs PPO: main differences

PPO plans:

  • Offer more flexibility in selecting a doctor or hospital
  • You are often less restricted from seeing out-of-network providers
  • Sometimes covers the costs of visits to out-of-network providers.
  • Of most companies that provide health insurance benefits to employees, 73% offered PPO plans, while only 37% offered HMOs, according to the 2018 survey.

HMO plans:

  • They are often more affordable, with lower monthly premiums and little or no annual deductible.
  • Often require referrals or PCP orders to see specialists for non-urgent needs
  • A list of network providers, including specialists, is usually provided – but if you choose to visit a doctor outside of the network, they may not provide coverage and you may have to pay the full cost of the visit.

Which insurance plan is best for you?

Deciding which is better depends on your current or future health needs. Paying the lowest monthly premium possible may seem like the right thing to do right now; Over time, you may want more flexibility, like a lower deductible.

Before you decide, be sure to check the list of network providers where you live. You should also estimate your income realistically, check the availability of a HMO in your place of residence and analyze if you will need to see a specialist next year.

Keep reading: