PPO vs HMO: What’s the difference and Which is better?

Last Updated on November 14, 2020

Do you want to know the difference between a PPO and an HMO? Do you want to know which one is better PPO vs HMO? Well hey! That’s what we will be going to find out in this article. This post will contain a detailed comparison of PPO vs HMO and which is better for you!

A lot of times people go back and forth between what’s the better plan and some folks are kind of stuck between 10-15 years ago’s difference between the PPO and the HMO. But a lot has changed in the last couple of years and really there could be great HMOs or great Appeals for a person really depending on what their needs.

If you want to know the answer to which is better HMO or PPO? You need to ask yourself a question first. The question that you need to ask yourself is do you want to see more or fewer doctors?

Once you have the answer to that question, then you can decide if the HMO is right or the PPO is right for you. Before going further, first, let us know what is HMO and PPO and what are their differences.

What is Health Insurance?

Health insurance is a type of insurance that is really based on having a large group of individuals. Who are all paying in a monthly premium and really having many folks who are not actually taking much money out or using a ton of services, and those folks who are not using the health insurance who are not taking out the services are actually helping to subsidize those folks who are using the services and actually taking money out in addition to paying the premiums in.

So everyone pays a premium and a large portion don’t use any services and a small portion actually does use the services. Now when we’re talking about health insurance. There are really four main factors that come into play:

• Age– The first one is age of the person being covered and usually the older you get the more likely you are to get sick or to get hurt. Therefore the cost continues to go up.
• Area of living– Number two would be if you live in rural areas you tend to have a higher cost than if you live in urban areas.
• Cost– Number three which could be the level of services that you’re getting so how you share those costs with the insurance company so deductibles coinsurance co-pays and those kinds of things change based on how you share this with the insurance company.
• Accesiblity– Number four is the doctors that you have access to you and how you access those doctors and that is going to make a big difference in the type of plan that you have now.

When we talk about PPO vs HMO it really pertains to the number of the type of doctors. The doctors you have access to you and how you access those doctors and obviously having an HMO or having a PPO could have a huge effect on the cost of the plan and the level of services that you are receiving.

What is HMO?

HMO is called a health maintenance organization and these plans are specifically designed for health efficiency. They ensure that you get the right amount of care but you don’t cost the company too much. These have become the most popular plans in the last couple of years for governments, small businesses, and individuals because they tend to be less expensive.

HMOs really managed the plan is by having a specific set of doctors that someone can go see. You have your primary care physician or gatekeeper who will refer you to those doctors, specialists, or physicians from within the contracted group.

HMO normally centered around where you’re living in the city or the state or even the county that you live in. So it’s a smaller group overall in comparison to other types of plans and then also it limits how much self-referrals a patient could potentially do. Which lowers the overall cost of HMOs.

Pros of HMO

1. Less expensive– This is the most important pro of HMO. The main reason people take HMO instead of PPO is because of its lower cost. As the HMO offers a specific set of doctors and limits the self-referrals a patient can do bring down the cost.
2. Less confusion– As you have a set group of doctors that you can go and see. So there’s not so much confusion about which doctors in the network which doctors out of the network.
3. Fixed Price– You gonna be paying in-network prices or out of network prices so you have an exact number of doctors that you can go see and you know which ones they are. You have set prices for whatever procedures you’re going to utilize

Cons of HMO

1. Limited service– The insurance company can limit how many services you can get and how long you can get those services.
2. No control– The insurance company manages all the services that are provided to you. They primarily focus on efficiency and make sure that you get the right care at the right price. Also, you don’t have the option to choose the doctor according to your preference.
3. Less coverage– You have a small group of doctors than what you have in other types of plans. So you can’t go across to other states and still use those centers or those doctors if you want to. You’re really stuck kind of where you are with the plan that you have.

What is PPO?

PPO is a preferred provider organization and these plans were really popular a couple years ago because you get a really good plan for a really good price and with really good benefits. But a lot of that has gone away the cost of PPOs has really skyrocketed over the last couple years.

So, PPO (preferred provider organization) is a type of plan where you have doctors that are in-network, who are preferred providers and you have doctors who are out of network, who are not preferred providers, and essentially you can go to either of them.

So, you can go to your PCP or you can go to a specialist and if they’re in-network, you’re gonna have set costs that are on your health insurance plans. If you go to a doctor outside the network as long as they’re willing to accept the insurance, then the insurance will pay some of the cost but not at the same rate that you have if you go to a doctor that’s in the network.

You end up paying a lot more money when you go see that doctor that’s out of network. What it does mean is it gives you so much more flexibility about which doctors you can see. This gives you the freedom to essentially self-referral yourself to go get other services or work with your doctor to think about what is the best solution for your health condition.

So, having unpredictable doctors as well as having unpredictable costs you more because if you go to doctors are outside the contract area means that these plans tend to be much more expensive.

Pros of PPO

1. More Coverage– You’re not really centered around where you live you can kind of go anywhere as long as that doctors willing to accept the plan and as long as you’re able to pay for it.
2. More freedom– Unlike HMO, you get more freedom in PPO. You can select any doctor of your choice. Also, you have a huge amount of doctors that you can go to in PPO.

Cons of PPO

1. Very expensive– They are usually pretty expensive and over the last couple of years, the cost has really gone up pretty dramatically for a PPO plan.
2. More Confusion– The confusion of which doctors are in-network and which ones are out of network. Makes it hard to predict how much cost you’re going to have until you get that final bill.

PPO vs HMO: Which is better for you?

There really is not the best type of insurance plan, when it comes to PPO vs HMO. What it really comes down to is your specific needs and your lifestyle.

So, if you don’t travel around that much and you don’t have many health concerns or your main focus is having health care that is less expensive. The HMO might be a better option if you’re willing to deal with the pros and the cons of it.

The PPO might be a better option if you have a different lifestyle. If you have lots of health care issues and you are also ready to pay the extra cost of PPO, then PPO is best for you.

Conclusion

Overall it’s not really a specific plan HMO or PPO that is best. Just what one works best for your specific situation is the one for you. So, there is no end result of the PPO vs HMO debate as both of them have their own pros and cons. It all depends on you to choose the right one for you.

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