The two most commonly used health insurance plans are HMO (acronym for Health Maintenance Organization) and PPO (Preferred Provider Organization). You may pay for your own insurance or have an agreement with your employee to pay for it. The arrangement between an employee and employer varies and you may be required to pay different insurance premiums. In either case, you will be provided a detailed member enrolment kit. This will help you to understand the advantages and disadvantages of both these plans. Few highlights of HMO and PPO plans are discussed here:

HMO PLAN

  • You will get comprehensive health care benefits.
  • You can choose a separate medical group and primary care provider for each member.
  • You will then choose a medical group or independent practice association (IPA)
  • You will need referrals to see specialists from your primary care provider.
  • You will get emergency care coverage.
  • You will get convenient access to a large number of physicians, providers, and hospitals for each insurance company you opt for.
  • You will be required to pay a copayment for health care (in-network, hospital visits, etc).

In the HMO plan, you will choose a primary care physician for each enrolled member in your family. Generally, your primary care physician will be from the following departments: obstetrics/gynecology/family practice/pediatrics/general practice etc. Look at the figure below to understand how you will choose a doctor and a medical group. Remember if you choose a medical group first, say Palo Alto Medical Foundation, you have to choose a doctor in this medical group only. Alternatively, if you prefer to select a physician, you have to choose a medical group based on that selection. The copay for HMO plan is lower than PPO plan. Your primary care physician co-ordinates your referrals to other doctors/departments and non emergency hospital visits.



PPO PLAN

  • You do not need to choose a primary care physician. You can go to any health care provider in the PPO network. You will not need any referrals as in the case of HMO plan.
  • You will have access to all the health care providers in the PPO network. Every network has thousands of primary care physicians and specialists.
  • You may also go ‘out of the network’ for a health care provider not currently in your insurance network. While this gives you more flexibility to choose a provider, you will have to pay a higher cost.
  • You will get emergency care coverage.
  • You will be required to pay copayment and optional annual deductibles.

The basic difference in the HMO and PPO plan is simple. In the former you have to choose a doctor and hospital. You have to stick to the doctor (and the medical group) and are not covered for any health care outside. You will need to pay copayments and get referrals from your primary care doctor to visit specialists. In the latter you have the option of choosing health care providers even out of the PPO network but you will have to pay a higher cost (deductibles, coinsurance). You are not dependent on a single physician for any referrals. You will be covered by your insurance even if you get out-of network services. However, if you pay more than the deductible amount you will end up paying for the difference from your pocket.
It takes a while to understand the difference in the HMO and PPO plan. It is a good idea to study both the plans and choose the one that meets your personal and medical needs.