Picking a health insurance plan for the first time can be quite challenging. There are many different kinds of plans to choose from. And you may need to have coverage from multiple insurers in order to get all of the health benefits you and your family need. Trying to decide between an HMO plan and a PPO plan can be difficult if you don’t understand the difference between the two insurance options. Here’s the lowdown on what an HMO plan is and how it works.
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HMO Health Plans: The Basics
An HMO is a health management organization. Through this type of healthcare plan, you’ll generally only be covered if you’re receiving medical services from a professional within your network.
Under an HMO plan, you’re required to have a primary care physician (PCP). If you need any kind of medical care, in most cases you must ask your PCP to refer you to a specialist who’s part of your local network. Women who need to visit a gynecologist or an obstetrician are an exception to this rule. You won’t need a referral to see either of these kinds of doctors.
If you have to see an out-of-network doctor because you’re dealing with an emergency, your insurance plan may agree to cover some of your medical expenses. But if you visit a physician who’s not in your network for other miscellaneous reasons – like wanting to see the same chiropractor that your friend visits every week – you’ll have to pay for your healthcare costs out of pocket.
The Benefits of Having an HMO Health Plan
While less than a quarter of healthcare plans are HMO plans, there are several advantages to having this kind of healthcare coverage. First and foremost, HMO plans tend to have low monthly premiums. As long as they follow the rules (i.e. remain within the network of healthcare providers) individuals with these plans usually don’t have to pay very much money out of pocket in comparison to folks with other kinds of insurance plans.
Paying for medical expenses can put a strain on your wallet. Having lower premiums and out-of-pocket costs through an HMO plan can make it easy to save money on healthcare costs. What’s more, if you have an HMO plan you’ll either pay a low deductible or no deductible at all.
Another benefit to having an HMO plan is the fact that you won’t have to complete much paperwork. Since every doctor you see will likely be inside your network, you’ll never have to file an insurance claim or worry about having your claim rejected. That’s not necessarily the case with PPO health plans.
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HMO Plans vs. PPO Plans
For the most part, the healthcare plans within the Health Insurance Marketplace are either PPO plans or HMO plans.
Unlike HMO plans, PPO (or preferred provider organization) plans are much more flexible. Under a PPO plan, it’s okay to see a doctor outside of your network. And you don’t need a referral from your PCP to see a specialist. But having health insurance through a PPO plan will cost more.
Not being able to meet with a physician outside of your network is a big drawback to having an HMO plan. If you become seriously ill or contract a rare disease, you may need to see a specific specialist. If that healthcare professional isn’t part of your network, you could easily rack up debt trying to cover the cost of your own medical care.
While you might not have to spend much money on deductibles or premiums, you’ll likely be responsible for paying a copay or coinsurance if you have an HMO plan. So even though your insurer will pay for most of your healthcare, you’ll have to cover a portion of certain services – like doctor’s visits, prescriptions and medical exams – on your own.
Do You Need an HMO Health Plan?
Applying for an HMO health plan might make sense for some people. For example, if you don’t have a serious medical condition and you don’t need to see different specialists, you may not have a problem with your plan’s lack of flexibility. And if you’re opposed to spending a lot of money on premiums and deductibles, an HMO plan could be a good fit for you.
But if you’d rather have access to a larger network of doctors and you don’t mind paying more for medical care, you could be happier with a PPO plan or another kind of health plan.
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With an HMO plan, you’ll never have to scramble to find a doctor or a specialist. Your primary care physician will refer you to any healthcare professional you need within your particular network. While you may not like having fewer options when it comes to getting medical care, you won’t have to spend a significant portion of your budget on healthcare costs.
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