Health insurance is an essential in today’s society. We need health insurance because it provides protection when there is an accidental injury, a catastrophic illness or even when there is a need for an expensive medical test. I had to become familiar with the available plans in the healthcare market and I thought that I would share some of what I have learned with you. You may need an individual plan or a family plan. There are a number of plans out there: HMO’s—Health Maintenance Organization, PPO’s—Preferred Provider Organization, EPO’s—Exclusive Provider Organization, POS’s—Point of Service, HDHP’s—High-deductible Health Plan and HAS’s—Health Savings Accounts.
My emphasis for this blog is on sharing about HMO’s and PPO’s and their differences:
What is an HMO, a Health Maintenance Organization?
- Networks are limited to a particular geographic place.
- There are a limited group of local healthcare providers who negotiate services for a lower price.
- A local primary care physician is required. Referrals are needed when seeing a specialist. The primary doctor refers participants to a specialist.
- Monthly payments are lower because there are fewer health providers.
- Healthcare providers do not pay for services outside of the designated network.
Types of HMO’s
The types of HMO’s range from staff model/group practice plans to individual practice association to hybrid plans.
- Staff model: doctors are paid a standard salary regardless of patient loads; premiums remain the same because there are no incentives to give unnecessary services.
- Individual practice: doctors receive a fee based on services provided or a fee for every HMO patient whether patients are seen or not; care is decentralized which entails the doctor and patient securing the needed medical facilities.
- Hybrid: standard fees are charged for services covered; patients may receive pre-paid benefits as well as the choice of going outside of the HMO plan. The patient must pay a co-payment for seeing a doctor outside of the network.
What is a PPO, a Preferred Provider Organization?
- Plan is more flexible than HMO with more choices.
- Participants may secure care in or outside of the healthcare network provider.
- Higher out-of-pocket costs when seeking care outside of the network.
- Participants do not need a referral to see a doctor or specialist outside of the network, including hospitals. Participants make their own appointments.
- When seeking care outside of the network, participants will pay the out-of-network provider and submit claims to be reimbursed.
You have to determine which plan is right for you. A PPO may fit you if you have to see a number of specialists outside of your network or if you want flexibility when seeking a doctor or hospital without having to get a referral. An HMO may fit you if want a lower premium with no deductible. An HMO maybe your preferred choice if you are seeking preventative care and desire to have a primary physician.
Terms to Remember:
1. Premium: what you pay. 2. Deductible: when a plan requires that you pay a certain amount before the insurance coverage begins. 3. Co-insurance: when a percentage of expenses is charged to the participants. 4. Copays: a flat fee paid by participants when receiving healthcare.