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I Don’t Understand the Difference between an HMO Plan and a PPO Plan

When you’re selecting new healthcare coverage, it’s very important to be sure that you are looking at all the right details and comprehending the differences between the various services. One of the most common questions surrounding this is with regard to the differences between an HMO and a PPO Plan. Educating yourself about what you get with each type of plan will allow you to make an informed decision.

The first major difference between these two plans is simply to do with price, but that is linked to the features and benefits included in the plans as well. The most common types of plans are HMO plans, which are named for Health Maintenance Organizations. Less common, but more expensive plans are known as PPOs, or preferred provider organizations.

Every healthcare plan that you select is going to include contracts with clinics, hospitals, doctors, and healthcare providers that are considered part of a “network” In managed care plans through HMOs, it’s very likely that you will need to receive all of your care from providers in the network, otherwise you might find out that you are being charged for visiting a physician outside of your plan, for example. While there are some cases you might choose to do this, not realizing the implications of going outside of network can be extremely expensive when you’re presented with the final bill that insurance will not cover.

In the HMO plan, you will select a primary care physician who will provide all of your basic and general healthcare services. If you need to visit a specialist, you will have to get a referral from this individual.  If you don’t get the referral or see someone outside of the network, you’ll likely be footing the bill for those services.

In a PPO plan, the contracts are with a network of preferred providers. You are not required to select a primary care physician, and you won’t need those referrals to other providers in the network for specialized care. If you get care from a doctor in the preferred network, you are only responsible for your deductible and a copay for your visit. If you opt for doctors outside of the preferred network, you will have to pay a higher amount and you may need to pay the doctor directly and get reimbursed after from your insurance company.