We do not handle Medi-Cal enrollment; please use the official resource, and complete the form pre-check to confirm eligibility.
We do not handle Medi-Cal enrollment; please use the official resource, and complete the form pre-check to confirm eligibility.
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Health Insurance Basics
October 25, 2024
Tom FeeneyHealth insurance plans come in a bewildering array of choices, often with terms that are hard to decipher in terms of their real-life implications for choice of care and cost. But among the most basic choices an individual has to make in selecting a plan is between a health maintenance organization (HMO) and a preferred provider organization (PPO). Knowing the difference between how these plans are set up and what you can expect from coverage and care can help provide significant guidance in selecting a plan that is right for you.
HMOs and PPOs function very differently in terms of how a patient accesses care. A health maintenance organization has an established network of doctors, healthcare providers, and hospitals that provide services for agreed-upon costs. In general, this allows an HMO to provide coverage to their members for a lower cost than other types of plans. However, patients are generally required to obtain care within the HMO’s network.
Preferred provider organizations also offer a network of healthcare providers who have contracted to provide services to plan members at an agreed-upon rate. However, members can obtain care from out-of-network providers if they choose to under a PPO plan.
How does this difference work out in practice? Here are some key points.
| Concern | Health maintenance organization (HMO) | Preferred provider organization (PPO) |
| How much will a plan cost? | HMOs tend to be less expensive, with lower monthly premiums and lower out-of-pocket costs. | The flexibility of PPOs tends to come with higher monthly premiums. Out-of-pocket medical costs can also be higher, especially if a patient frequently sees out-of-network providers. |
| Do patients have to have a primary care physician (PCP)? | Yes. Most HMOs will require care to be coordinated through a primary care physician, who will provide referrals to specialists when needed. | No. Because PPOs don’t require a referral to see a specialist, patients do not need to designate a provider as a PCP. |
| Are referrals required to see another doctor? | Yes. With an HMO, a patient will first need to see their PCP, who will then give them the necessary referral to see an in-network specialist. | No. PPOs do not require patients to get a referral to see the medical provider of their choice. |
| Can patients get the cost of seeing an out-of-network doctor or specialist covered? | No. HMOs do not provide coverage for care from out-of-network providers, except in the case of a true medical emergency. | Yes. PPOs allow patients to see doctors who are out of network. In general, however, these visits will have a higher fee and a separate deductible from in-network care. |
| Do patients have to file claims? | No. HMOs permit only in-network care, and the insurance company pays the provider directly. It is highly unlikely the patient would ever have to file a claim. | Yes, in some instances. With a PPO, the patient may have to pay a doctor directly and then file a claim with insurance for reimbursement. This is most likely to happen with visits to out-of-network providers. |
When might an HMO be a better choice? If low costs are a high priority and working with a primary care physician to manage your care with in-network doctors is not a problem. If you already have a doctor you like and are working with specialists who aren’t in an HMO’s network, though, a PPO may be a better option.
If you’re faced with the confusing task of trying to determine which health insurance plan will offer the right coverage and benefits for you and your family, Medical Insurance Today can help. Our team offers plain-language explanations in English and Spanish that clearly lay out the details of each plan so you can choose the one that best fits your needs and your budget. Whether you’re looking for Covered California, Medicare, or individual/family insurance, we can provide insight that takes the stress out of getting insurance. To get started, contact us here today.
Medical Insurance Today is a vibrant, customer focused team with answers for you and your families, on healthcare insurance. After decades of being in this sector, we have created a concierge level service that puts you and your families first with live human agents who are bilingual in English and Spanish. You can also come in and see us at our new location in Costa Mesa, California. Our aim is to make your life easier to access our services both in person or online.
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