It's only been about a decade or so since managed care became the way most people receive their healthcare coverage. When it comes to managed healthcare, it comes down to one of three plans: PPO, HMO, or POS. It can be a challenge trying to decide which option is best for you. PPOs have a slight edge over HMOs, with slightly more individuals opting for Preferred Provider Organizations over Health Maintenance Organizations. PPO - a hybrid offering a combination of options from both plans - presents a third option.
Similarities Between Plans
All managed healthcare plans involve contracts with doctors, hospitals, and other medical providers. These providers operate within a specific network, meaning that patients seen by a certain doctor must go to certain hospitals for treatment. The differences in each plan come down to factors such as flexibility of out-of-network coverage and how much you are willing to pay for certain conveniences. Generally, the more freedom of choice you have among doctors, hospitals, and pharmacies, the higher premium you're going to pay.
Health Maintenance Organizations (HMOs) limits your options for out-of-network care. Typically, your out-of-pocket expenses are less than what you'd pay with a PPO plan, as long as you stay within your network. You also usually have less paperwork since your primary care physician is at the heart of most of your care. HMOs tend to focus on overall quality of care. Common HMO features include:
- Co-payments range from $10-20.
- Usually no co-insurance payment is required.
- Deductibles usually range from $100-500.
- A referral is required from your PCP to see a specialist.
- If you go out of your network, you usually have to pay the full fee for those services.
Summary: If your doctor and your normal healthcare providers are within your chosen network, an HMO plan will probably equal significant savings for you. If you can live with the restrictions and don't have serious healthcare needs that require multiple specialists and other out-of-network care, an HMO is likely the right option for you.
Preferred Provider Organizations (PPOs) generally mean more out-of-pocket expenses, but your network of healthcare providers tends to be larger and it's not that difficult to opt for out-of-network care. Common PPO features include:
- Co-payments for in-network or preferred doctors usually range from $15-30.
- You must pay an annual deductible - usually between $250-1,500 - and expenses have to reach a certain amount before your insurance kicks in.
- You are free to see out-of-network specialists without a referral from your PCP.
- If you seek out-of-network care, you'll pay about 20-40 percent of the fees related to this care.
Summary: A PPO plan may be right for you if you want greater freedom to choose the care you want from the healthcare providers you wish to see, regardless of whether or not they're in your network. If you can afford an annual deductible and enjoy the freedom that comes with that, this plan is likely right for you.
No one option is better than the other when it comes to your managed care choices. It all comes down to deciding what your needs are, what you can afford, and which plan closely fits your healthcare requirements without stretching your budget further than it's already stretched. Keep in mind that you're not stuck with a plan forever, you can always make changes as your medical needs change. Most providers give you an initial period to try a plan and make a change without penalty. When it comes to healthcare, information is your best medicine.
Jean Gregoryis a blogger who writes for AskForInsurance.com - an insurance questions and answers website where you can learn about topics such as How much should I expect to pay for health insurance?