PPO vs. HMO + FAQs on HDHP

Do you know the difference?

Two of the most common types of managed care plans are a Preferred Provider Organization (PPO) or a Health Maintenance Organization (HMO). Both plans have their advantages, and as with any decision, the right health care plan depends on your needs and the needs of your family.

A PPO generally offers more flexibility and access to a greater number of physicians, however these plans can be more expensive.

• Larger network of “preferred providers” (doctors, specialists, hospitals, etc.)
• Flexibility
• Visit out-of-network providers
• See a specialist without a referral
• Specified plan limits on out-of-pocket expenses
• Copayment or deductible payment at appointments
• Costs may vary depending on whether your doctor is in-network or out-of-network

HMOs tend to be less expensive, but there are limits to the doctors you can see under the plan.

• State-licensed policy that delivers physician and hospital services to holders directly or through contacts with affiliated providers
• Select a primary care physician (PCP) who is in-network
• You can only go to your PCP or a specialist referred to you by your PCP
• Tend to have lower premiums and out-of-pocket expenses

Now that you understand the difference between a PPO and HMO–we must address a few commonly asked questions about high deductible health plans (HDHPs).

FAQS about HDHP

1. Is a HDHP a PPO?
   1. Yes. A high deductible health plan (HDHP) is another version of a Preferred Provider Organization (PPO) that generally has a higher deductible and lower premium.
2. How does a HDHP work?
   1. The insured person is responsible for paying 100% of the defined annual deductible prior to receiving any coverage from the insurance carrier. For example: If you are enrolled in a HDHP and you have a $1,500 deductible, you are responsible for satisfying that deductible before insurance will pay for medical services. Let’s say you have not met your deductible and you visit the doctor for a non-preventative visit which costs you $150. He sees you and recommends a necessary procedure totaling $500. How much do you owe? You owe the $500 procedure cost plus the cost of the office visit, $150, because you have not yet met your deductible.
   2. A HDHP provides both in and out of network benefits.

1. What is an HSA?
   1. A health savings account or HSA is the funding vehicle used to help you pay for the out-of-pocket expenses you have before you reach your deductible with a HDHP.
   2. It is a tax-advantaged medical savings account that helps you save money.

Questions about understanding the differences between these common health plans? Let us know!

This post is for informational purposes only.