When approaching the decision to select a health insurance provider the options out there can be quite daunting. One of the biggest decisions you'll have to make is whether or not to choose a Health Maintenance Organization (HMO) or a Preferred Provider Organization (PPO), the most common structures health insurance providers fall under. This article will highlight the key features and differences of the two to help you make the right choice for you when facing the HMO vs. PPO decision. Typically you have your HMO plan costs and also the co-payment costs for some services (varying based on your actual plan).

Key Features of an HMO

HMO plans require you to choose a Primary Care Physician (PCP) from their network who will be your first point of contact for all medical and health issues that you have. Whenever you need to see a specialist or any other health professional you will need to have a referral from your PCP. So for example, if you need to see a chiropractor for some reason, first you need to go to your PCP and get a referral from them to see a chiropractor in the HMO's network. Two exceptions where you don't need a referral are emergency visits and visits by a woman to their obstetrician/gynecologist.

Benefits of a HMO

  • You have a single point of contact in your PCP who has a comprehensive view of your overall health picture. For those who need to visit numerous specialists this can be a major consideration.
  • HMO's often offer a variety of services at a single facility (i.e. an HMO managed hospital) so you can visit your PCP and specialists at the same facility, making coordination of doctor's visits easier.
  • Limited paper work and cost to you when using the HMO network, often there is no need to file claims and you're only responsible for making any required co-payments in your plan.

Detriments of an HMO

  • You are required to visit health providers in the same network, and if you go outside of the network for any reason you will likely have to pay the full cost yourself.
  • HMO's historically were the cheaper option but in the last decade that has changed and they are now generally more expensive than PPO options.

Key Features of a PPO

PPO plans primarily differ from an HMO primarily in that you are not required to have a PCP and can visit any health professional in the network without a referral. Another key distinguishing factor is that you can use health professionals both in the network and outside of the network, though typically PPO will reimburse you for less if you go outside of the network. Typically you have your PPO plan costs and also the co-payment costs for some services (varying based on your actual plan). Some PPO's also require an annual deductible, where you need to pay out a certain amount in the year before you will be eligible to reimbursement.

Benefits of a PPO

  • Great flexibility of choice to you in terms of choosing health care providers, providing the ability to get service outside of your network (even if the cost to do so is higher than an in network service).
  • Eliminates the step of needing to get a referral for every visit to a specialist or health provider, saving you time.
  • Lower cost overall when compared to HMO's. This is a new development reflecting how these flexible networks have worked to lower costs.

Detriments of a PPO

  • Typically there is more paperwork required when you choose a PPO. While most in-network health providers can take care of your paperwork any out of network services will require you to file a claim with the PPO.
  • Your out of pocket costs can be higher in a PPO where if you visit an out of network provider you will have to pay the full cost and submit a claim for reimbursement.

So What Should I Choose?

Ultimately you need to assess which plan best suits the needs of yourself (and your family). If you have numerous health issues to consider it may be beneficial to go with an HMO and have a centralized PCP who is aware of them all and cognizant of how different specialist recommendations impact each other. If your needs are more limited and you'd prefer the flexibility of being able to see specialists quickly and without the delay of getting a referral, then a PPO is likely a better option.

It's also recommended that you don't rush a decision and carefully weigh numerous options, considering the co-payments and deductibles of the various plans you have access to. Furthermore, doing a little online research for reviews of the HMO's and PPO's you're considering is always a good idea. In our internet age grievances and issues with health care networks are often aired publicly in online forums and what you find may impact your HMO vs. PPO decision.