Friday, September 30

What Is a PPO better than an HMO?

Is a PPO better than an HMO?

Based on the flexibility in PPOs, many people choose this type of plan. Forty-four percent of employees enrolled in a PPO, and 19% enrolled in an HMO, according to the 2019 Employer Health Survey. But the better question is, “Which type of plan is best for me?” Both PPOs and HMOs have advantages and disadvantages. The one that is best for you depends on you and your family’s healthcare needs. 

Generally, an HMO might make sense if lower costs are most important and you don’t mind using a PCP to manage your care. However, you should review the plan’s network services first, as some could be quite limited. A PPO may be better if you already have a doctor or medical team that you want to keep but doesn’t belong to your plan network.

Questions to ask when considering an HMO plan include:

  • Are my doctors in the HMO network? If not, am I willing to change providers?
  • What is the cost of monthly premiums?
  • What are the copay costs?
  • How often do my family and I go to the doctor? In a typical year, what would my expenses be? 
  • Does anyone in my family have serious health conditions or need extensive medical care?
  • Am I willing to get referrals when I see a medical provider besides my PCP? 

Questions to ask when considering a PPO plan include:

  • Are my doctors in the plan’s network? If not, am I willing to pay a higher coinsurance? 
  • Is there a deductible for out-of-network care?
  • What is the cost of monthly premiums?
  • What would a typical doctor’s visit cost, based on the coinsurance rate?
  • Can I estimate my annual out-of-pocket expenses?
  • Is there someone in my family that has a medical condition best served by medical providers outside Tier 1 or that we could not see if we were enrolled in an HMO?

What is more expensive: HMO vs. PPO?

Typically, HMOs have lower monthly premiums than PPOs, but the difference isn’t always significant.

HMO PPO

Monthly premium (single)  $603 $640

Monthly premium (family) $1,725 $1,807

Annual premium (single) $7,238 $7,675

Annual premium (family) $20,697 $21,683

The chart is based on a nationwide average and does not include what your employer contributes. Your actual payroll deduction could be significantly different for each type of plan. Your Human Resources department can provide you with figures based on the offered plans and company contributions. 

Both Medicare and most insurance companies offer both HMOs and PPOs. If you see a non-traditional medical provider, check to see if the plan covers these services. Non-traditional medical providers include chiropractors, acupuncturists, reflexologists, and massage therapists. Look carefully at exclusions and calculate health care costs during a typical year to help determine which is best for you. 

Ready to enroll?

“If you don’t have insurance through your employer, you want to start at healthcare.gov and see what options are available in your area,” explains Matt Woodley, the founder of creditinformative.com. “There, you can compare options, including HMOs, PPOs, EPOs [Exclusive Provider Organizations], and POS [Point of Service] plans. You should review the summary of benefits for each plan and cross-reference against your and your family’s medical needs. For those with networks, you can verify that your primary doctor is on the list and, if not, eliminate that plan if you do not want to change doctors.”

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