4 Types of Health Plans: How They Compare
Health Maintenance Organization (HMO)
An HMO delivers health services through a network. With an HMO, you may have:
- The least freedom to choose your health care providers.
- Predictable out-of-pocket costs.
- The least amount of paperwork compared to other plans.
- A primary care doctor to manage your care and refer you to specialists when you need one so the care is covered by the health plan. Most HMOs will require a referral before you can see a specialist.
What doctors you can see. Any in your HMO's network. If you see a doctor who is not in the network, you'll have to pay the bill yourself -- unless it's an emergency.
What you pay.
- Premium: This is the cost you pay each month for insurance.
- No deductible.
- Copays for each type of care.
Paperwork involved. No claim forms. You won't get bills for care that is covered.
Preferred Provider Organization (PPO)
With a PPO, you may have:
- A moderate amount of freedom to choose your health care providers -- more than with an HMO. You do not have to get a referral from a primary care doctor to see a specialist.
- Generally higher out-of-pocket costs than with an HMO.
- More paperwork than with other plans if you see out-of-network providers.
- The ability to manage your own health.
What doctors you can see. Any in the PPO's network. You can see out-of-network doctors, but you'll pay more.
What you pay.
- Premium: Your monthly payments are based on the negotiated rates PPOs have with their network providers. Premiums for a PPO are usually higher than for an HMO because you do not need a referral from a primary care doctor to see a specialist.
- Deductible: Some PPOs may have a deductible. You will likely have to pay a higher deductible if you see an out-of-network doctor.
- Copay or coinsurance: A copay is a flat fee, such as $15, that you pay when you get care. Coinsurance is when you pay a percent of the charges for care, for example 20%.
- Other costs: If your doctor charges more than others in the area do, you may have to pay the balance after your insurance pays its share.
Paperwork involved. There's little to no paperwork with a PPO if you see an in-network doctor. If you use an out-of-network provider, you'll have to pay the provider. Then you have to file a claim to get the PPO plan to pay you back.