Choosing a specific health insurance plan
is not the only choice you have to make. There are also different types of coverage out there, the biggest of which are PPO plans and HMO plans. There are differences between these two major types of insurance plans that sets them worlds apart, each with its own upside and downside.
The Health Maintenance Organization (HMO) Plan
A Health Maintenance Organization (HMO) plan is the most affordable type of plan between the two when comparing plans with benefits alike. This is because you must see a medical provider within the HMO plan.
How it works is that your HMO will have an agreement for service costs with a select group of medical providers. These medical providers have often agreed to lower-than-normal fees for all or part of the services they provide to patients within the HMO. Because your insurance will be charged these lower fees by these specific medical providers, these are the medical providers that you must utilize in order to have your expenses covered by your insurance plan.
You cannot choose any medical provider you want, that is the downside of an HMO plan. The upside for you is that you will be able to secure a more affordable monthly premium, since the HMO incurs a lower cost due to their agreement with these medical providers.
The Preferred Provider Organization (PPO) Plan
A Preferred Provider Organization (PPO) plan is the more expensive type of plan between the two when comparing identical benefits. This is because you can pick and choose which medical provider you go to and still have your expenses covered by your insurance plan.
A PPO plan will cover expenses with any medical provider you see, that is the upside of a PPO plan. The downside is that you will incur a larger monthly premium, than you would with a comparable HMO plan.
How to Choose the Right Option for You
The only two questions you really need to ask yourself are:
- Will I feel limited by only being able to see certain medical providers?
- Can I afford the extra cost of being part of a PPO, as opposed to an HMO?
If you have no qualms about being restricted on which medical providers you can see, then an HMO may be the best option for you, so that you can save a little