Health Insurance: HMO vs. PPO
HMOs and PPOs are the two most common health care plans available. In this article, we will discuss further what these two plans are and the positive and negative points of both.
What is an HMO?
HMO or Health Maintenance Organization is a tightly organized healthcare provider that is in contract with insurance companies agreeing to provide service at a pre agreed price. In an HMO plan, your out of pocket expense is kept to a minimum. Premiums are much lower compared to other health plans. However, HMO plans are restrictive. You are required to choose from the doctors on their list. If you need a specialist, you have to get a referral from their primary doctor first.
You are also covered for some lab tests and hospitalizations. Some tests are needs to be pre-approved first before you can have it done. This make take days or weeks especially if the test is debatable. For hospitalization, the fewer days you are there, the better for the HMO provider.
What is a PPO?
PPO or Preferred Provider Organization also have contractual agreements with insurance companies but are more flexible than and not as restricted as HMOs. You can choose almost any doctors even those outside the providers list. But with fewer restrictions, comes higher cost. You will not need a referral if you opt to see a specialist but it may cost you more than seeing a preferred listed doctor. Health care providers usually reimburse a maximum of 80% of the specialists’ bill.
PPO will be an advantage to you if you have a specialist friend, or if you prefer alternative medicine services like seeing a chiropractor or using acupuncture for your pains.
Choosing the better health insurance provider depends heavily on your financial circumstances although it is not the only factor that you have to consider. Whichever you decide on, remember that it is better to have a health care insurance than none at all.
