PPO vs HMO Plans: Which is Right For you?

PPO vs HMO Plans: Which is Right For you?

Looking to buy health insurance in Massachusetts? You may have heard about HMO and PPO plans along with other health insurance plan-related acronyms. Knowing what they are and how they differ from each other, and more importantly, which one is right for you, can be challenging.

Here is a closer look at PPO vs HMO plans and what factors to consider when choosing a health insurance plan.

What is an HMO?

Before taking a look at what an HMO plan is, it is important to know what a network of providers means. Provider networks refer to healthcare providers who have a contract with an insurance company to provide healthcare services at discounted prices. These networks include GPs (general physicians), specialists, X-ray facilities, labs, and medical equipment suppliers.

HMO stands for Health Maintenance Organization that provides health insurance for its members for a monthly or annual fee.  The organization enters into contracts with physicians, specialists, and clinical facilities. The providers who enter into these contracts are paid a fee by the HMO to offer healthcare services to subscribers of the HMO plan. As patients are directed to physicians and there is an agreed payment, the premiums for this plan are lower than most traditional health insurance plans.

If you choose the HMO plan, you will need to choose your primary care physician or PCP from the approved healthcare providers’ list and see the PCP first. While your PCP takes care of your healthcare needs, they will refer you to a specialist as and when needed. A referral from the PCP is a must for you to see a specialist including a dermatologist, obstetrician, cardiologist, rheumatologist, or other specialists.

For instance, if you have a skin problem, you cannot see a dermatologist right away, but see your primary care physician first who will evaluate you. If your PCP cannot help you, they will provide a referral to a dermatologist in the network.

Exceptions to the rule include emergencies and women who want to see an OB/GYN (obstetrician/gynecologist) for obstetrical care, well-woman visits, Pap tests, and other routine care. In these cases, a referral from the PCP is not required.

What is a PPO plan?

PPO denotes “Preferred Provider Organization,” a managed-care network encompassing medical professionals (primary physicians and specialists) and facilities (hospitals and labs).

If you choose a PPO plan, you can see any healthcare provider in the network you wish including a specialist without a referral from your PCP.  PPO plans offer a comprehensive range of providers as compared to HMO plans while the premiums you pay are typically higher. This is because PPO plans are typically costlier to manage and administer. While maximum coverage can be enjoyed by visiting healthcare providers in the network, you can still get some coverage when you visit providers who are not in the network.

The flexibility the plan offers in visiting a provider of your choice offers the best value to subscribers.

Designating a primary care physician is optional in this plan and PPO plan members can directly make appointments with a provider of their choice.

PPO vs HMO: Premiums, deductibles, and co-pays  

While there are variations, typically the HMO plans offer lower monthly premiums while the out-of-pocket expenses are also lower.

There may not be any deductible that you need to pay before coverage starts while co-payments are also minimal. Co-pays are minimal in the HMO plans and range from $5 to $20 per service.

There is also no paperwork or the need for HMO plan members to submit their own claims to insurance providers. An important point to note is that there is no coverage when you consult out-of-network healthcare providers or when you consult a specialist without your PCP’s referral.

With a PPO plan, you have the freedom to see any healthcare provider, while the monthly premiums and out-of-pocket expenses are higher. These plans have an annual deductible before the medical bills are covered by the insurance provider. You also have to make co-payments for certain services or pay a percentage of your medical bills.

The average co-pays in PPO plans are:

  • $25 for behavioral health and primary health care visits,
  • $45 for consulting specialists or for urgent care center care
  • $10 for telemedicine consults

ppo vs hmo deductible

Which one is right for you?

Many factors go into selecting the right insurance plan that meets your unique needs. Some factors you should consider when deciding between PPO vs HMO plans include the coverage benefits, flexibility the plan offers, the monthly premium, co-pay, and deductibles. It is important to consider the total cost of your health insurance which includes co-pay or out-of-pocket expenses and the deductibles.

The HMO plan is ideal if you

  • are looking for plans with lower premiums and co-pays
  • want plans that carry no deductibles
  • are okay with your physician coordinating your care
  • do not have chronic health issues that require frequent specialist visits
  • require preventive care coverage for immunizations and checkups

Generally, if low costs are your priority, HMO plans are preferable. However, if you see a doctor regularly who is not in your HMO network or want to consult a specialist without waiting for your PCP’s referral, a PPO plan may be the right choice.

A PPO plan is the right choice if you

  • want the freedom and flexibility to visit any medical facility or healthcare provider
  • do not want to wait for referrals to visit a specialist
  • are looking for the insurance company to cover a part of your out-of-network expenses
  • do not mind paying higher premiums, co-pays, and deductibles
  • visit a specialist frequently
  • can take the responsibility of coordinating your own care without a PCP

Find the best health insurance plan by comparing quotes

It can be challenging to find the right health insurance plan in Massachusetts given the array of options and varying costs. It can take a long time to individually visit each provider’s website and dig through the information to find out what coverage they provide and the total cost of the plan.

At MassHealthPlans.com, we offer a streamlined online tool that enables you to easily compare health insurance rates in Massachusetts and make an informed decision.

Just fill out your basic information and answer a simple online health questionnaire to get a list of the best health insurance plans in Massachusetts and compare the quotes.