HMO Versus PPO: Know the Difference before Choosing a Plan

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Many individuals looking for health insurance protection need to understand the difference between different types of insurance plans. Your California health insurance agent gets asked a lot of questions about the difference between an HMO and PPO.

HMOs and PPOs are both managed health care plans. HMO stands for Health Maintenance Organizations and PPO stands for Preferred Provider Organizations.  Understanding the benefits as well as the differences between each of these health plans will help consumers make better and more educated choices regarding their health care and their California health insurance choice.

HMOs (Health Maintenance Organizations) are at their most basic definition a pre-paid and voluntary health plan that offers a wide range of healthcare services that require a monthly membership premium. Premiums or costs are based on past and projected costs and the claims history of various treatments over a period of time. HMOs are considered for-profit organizations, so they do provide preventive medicine measures while at the same time emphasizing cost controls.

Most employers as well as insurance companies today can offer employees or enrollees several types of HMO plan designs. Cost savings are beneficial in this type of plan, and individuals who enroll in HMOs tend to have lower out-of-pocket expenses. In many cases this lower out-of-pocket expense for the persons enrolled in an HMO will result in a higher premium. These type of benefits are what California health insurance agent refer to a “Rich Benefits” meaning the insured pays very little for health care services and the insurance company pays most or all of the health care bill.

HMOs offer coverage for hospital stays, doctor’s office visits, diagnostic and laboratory tests, surgeries, and additional services that are provided by the members of the organization. In most cases, a primary care provider, also known as a PCP, manages healthcare services under an HMO plan. Individuals assigned to a primary care provider must go through this physician for referrals to a specialist or other doctors who are also contracted with the HMO. Insured individuals may choose their own primary care physicians or change them as long as they are members of the designated area HMO network. However, insured individuals are not able to choose the hospitals or specialists who provide their care.

Preferred Provider Organizations (PPOs) offers services and agreements between self-insured employers, California health insurance carriers, and healthcare providers. Individuals enrolled in a PPO receive necessary care the same as are offered by an HMO but are also able to select their health care providers, including physicians as well as hospitals from a list of participating providers in a given area. In addition, the beneficiary of a Preferred Provider Organization may also choose services from nonparticipating providers, but will experience higher co-pays and deductibles than if they stayed inside the "network". In addition, PPO beneficiaries generally share in the cost of their health care services up to a certain pre-determined amount. For example most PPO plans will have a deductible and a coinsurance amount the insured is responsible for before the health plan pays 100% of the health care costs.

Before choosing a PPO or an HMO, consider monthly premium payments, deductibles, and co-payments as well as out-of-pocket expenses and costs. Also double check and make sure of any restrictions or guidelines regarding pre-existing medical condition restrictions or exclusions to policy plans. In addition, ask your California health insurance agent about waiting or grace periods before policies go into effect.

Also ask your California health insurance agent regarding prescription drug options and dental and vision care. While lower costs and affordable plans are attractive, do exercise caution before choosing one plan over the other without taking the time to research and understand the similarities and differences between an HMO and PPO.

Get a California Health Insurance Quote and compare HMOs and PPOs

Matts California health insurance services can help you easily find a health plan that fits your health care needs as well as your budget. As an independent broker we can give you an unbiased comparison from all the top California health insurance companies in one easy quote. Compare carriers like Anthem Blue Cross, Aetna, Health Net, Blue Shield of California, PacifiCare, and Celtic health plans. Once you have finished your research and have decided on a plan you can use our secure carrier direct online health insurance application links to apply for coverage. If you prefer to print out an application we have the most up to date applications available from every carrier. And of course we are available to answer any questions you may have.