PPO Vs. HMO: What's the Difference and Which is Better?

Next Step: Take the PPO Vs. HMO test for yourself - http://www.giangolainsurance.com/health-insurance-after-obamacare-ohio

What Does PPO Mean?

PPO stands for Prefered Provider Organization. This type of plan offers a higher level of reimbursements when you receive treatment from a “preferred” doctor or hospital.

In less fancy insurance terms, you pay less.

This is also known as your health insurance company’s network. These “preferred” providers offer their services to you at a cheaper rate if they’re in your insurance company’s network. You even have the ability to see non “prefered” doctors with this plan, they are just consider out-of-network doctors.

PPO’s have dominated the health insurance landscape for the last 10-15 years.

What Does HMO Mean?

HMO stands for Health Maintenance Organization. This plan type works a little different from a PPO.

Instead of being able to choose from a list of doctors at a wide array of facilities, you are strictly limited to doctors and facilities contracted with that health insurance company.

The goal of this plan structure is to have a primary physician manage your care. The most famous example of an HMO structure is the company HealthSpan, formerly known as Kaiser Permanente.

These plans generally are less expensive than a PPO plan, however that is in exchange for a limited selection of doctors and hospitals.
Let’s Take a Closer Look

So I’ll ask you again, how many doctors do you want to be able to see if something really bad happens?

The answer to that question is the answer to your internal PPO vs. HMO debate.

But if you want to go even deeper, here’s what you need to think about.

When does a HMO plan Make Sense?

This is a hard question to answer since it will always come down to personal preference.

But, this is how I like to explain it to clients.

If there is a HMO plan that has doctors close to your home that you like and trust and also has an adequate number of hospital facilities, that’s a decent first step. You also need to be able to save a considerable amount of money on your health insurance payment every month.

Finding both of those together is the tricky part. I have yet to see a HMO plan that offers enough savings to consider recommending one to a client.

When you only save a couple dollars every month, you have to ask yourself if it is really worth it to limit yourself that severely when it matters the most.

I've never been able to answer yes to that question for a client.

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