What is HMO Insurance: Everything You Need to Know
When you're choosing insurance, you've probably wondered "what is HMO insurance?" Two options–Health Maintenance Organization & Preferred Provider Organization.5 min read
What is HMO Insurance?
When you're choosing insurance, you've probably wondered "what is HMO insurance?" There are generally two options–Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) when choosing insurance. There are a few differences between the two, including:
- Out of network service coverage
- Ability to see specialists
- Cost of the plans
- Size of the plan network.
With an HMO, you'll get access to see specific doctors or visit hospitals that are within the network your insurance company uses. These networks are made from providers who have agreed on special rates for their members.
Keep in mind that with an HMO, services are only covered when you use in-network providers. Generally, an HMO does not cover services at out-of-network hospitals or providers, unless, of course, it is a true emergency.
One of the big benefits to an HMO is that they cover a larger range of preventative services than many other plans, allowing you to maintain your health. In addition, with an HMO you'll generally enjoy lower out-of-pocket costs.
Most HMO plans require you to see your primary care physician first, who can refer you to specialists. However, some plans allow you to see a specialist even if you haven't been referred by your primary care physician. If you choose to see a doctor who is not in-network, this will not be covered. In this case, you will be responsible for the entire cost of the service.
What is PPO Insurance?
If you choose a PPO, you'll get more flexibility in your choice of hospital or doctor. There is still a network that you can choose from. PPO insurance has fewer restrictions when it comes to seeing providers that are not in-network.
For some, a PPO is the better option, because there is at least some coverage for out-of-network providers. Usually this coverage is lower, but still there. This allows you to go to a hospital that isn't in-network, even when it isn't a dire emergency. When using a PPO, you can visit a specialist or other doctor without a recommendation from a primary care physician.
If you have a PPO, you do not need to specify your primary care physician and can choose whatever health care professional you want to use. This gives significant flexibility.
The downside to a PPO for many is that the premiums are generally higher. Usually, you will have a yearly deductible, as well.
Do You Need a Primary Care Physician?
If you have an HMO, you will likely need to designate a primary care physician. This is the doctor who takes care of you regularly and will give referrals for specialists and tests. With a PPO, a primary care physician is not required.
Do You Need a Referral?
If you need to see a specialist or have specific testing done, you will need a referral if you have an HMO. These referrals are given by your primary care physician, who can also set up the appointment and get you to the right person.
If you have a PPO, you usually don't need to get a referral for a specialist
Can You See a Doctor or Specialist Who is Out-of-Network?
With an HMO, you do not get out-of-network coverage This means that you cannot see a doctor or go to any facility that is out of network. There are some exceptions to this rule, like if there is an emergency situation.
With a PPO, you do have the ability to see out-of-network doctors and go to out-of-network facilities. However, you will likely have a separate deductible for this, as well as higher fees.
Do You Have to File a Claim?
If you have an HMO, you will probably never have to file a claim. This is because you are limited to only in-network physicians and facilities. The insurance company pays the facility or doctor directly, giving you peace of mind.
With a PPO, however, you may have to file a claim. If you use an out-of-network provider, you have to pay the provider directly then file a claim with your insurance company to be reimbursed.
How Much Does It Cost?
HMO plans are generally the most affordable option. They offer lower premiums each month. The out-of-pocket cost are also less with an HMO. Some aspects to consider include:
- Cost share
If you choose a PPO, the monthly premium cost is going to be higher. Because of this, you can choose either in-network or out-of-network providers. Keep in mind that with out-of-network providers, you may have to pay a separate deductible. In addition, the out-of-pocket costs are higher with a PPO.
How Do You Choose Between an HMO and PPO?
Many insurance companies offer both HMO and PPO plans. You may find yourself choosing between the two. There are several aspects to consider before making your choice, such as:
- Your medical needs
- Your income
- The in-network providers
Before choosing between an HMO, make sure you know what providers in your area are in-network. This can save a lot of stress later.
You will also need to designate your primary care physician. This is the doctor who is always your first point of contact for medical needs. Your primary care physician offers insight and referrals for specialists. They also have a fuller understanding of your overall health, which is beneficial for all parties.
Choose an HMO if you:
- Don't require the flexibility of out-of-network providers
- Want lower deductibles
- Want lower out-of-pocket costs
- Need mostly preventative care such as immunizations and regular checkups.
What is an EPO Plan?
An EPO plan is basically a hybrid between a PPO and an HMO. This type of plan offers the flexibility you're looking for with a PPO, as well as the lower cost of an HMO. With an EPO, you are not required to choose a primary care physician. You are also not required to get a referral to see specialists.
EPO plans have a limited network for you to choose from, and, like an HMO, they do not cover out-of-network providers, except in the case of an emergency. When choosing an EPO, it's crucial to understand their in-network providers. Similar to an HMO, you will be responsible for all costs if you choose to go to an out-of-network provider.
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