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HMO versus PPO
The primary difference between PPOs and HMOs is the amount of freedom you have in choosing doctors and how much you share in the cost of your care. With an HMO your care is coordinated through your primary care physician (PCP) (United Healthcare is an exception to this rule). Your PCP will refer you as necessary to specialists or other doctors. PPOs allow you to see specialists without referrals, as long as they are in their doctor network. PPOs typically have some coverage for out-of-network services, although at a higher cost to you than in-network. The increased freedom of choice of a PPO does result in more cost-sharing by the consumer. Typically, your out-of-pocket expenses are higher with a PPO. You would be responsible for a deductible then coinsurance, up to an out-of-pocket maximum. For example, if you had a $500 deductible PPO with 80/20 coinsurance, you would be responsible for the first $500 of claims incurred, then you’d pay 20% of any expenses incurred after that until you reached the maximum out-of-pocket amount. At that point you would be covered 100%.
HMOs typically do not have deductibles or co-insurance, and there is no out-of-network coverage except for emergencies. They have copays for each service. For example, you might pay $25 for an office visit, $850 copay for a hospital admission, or $100 for an emergency room visit. HMOs and PPOs have their pluses and minuses. If you’re not sure which plan would work best for you, talk to us and we will be glad to help you find the least expensive plan with the best benefits.
