In a typical HMO, you specify a primary care doctor who is your
first call for medical care. Visiting a specialist typically requires a referral from this primary care doctor, and care outside of the plan’s medical network is not covered.
One trend in individual health insurance plans is the increase of HMO options, such as Kaiser in Atlanta and Bright Health Plan in Greenville. As we look forward to Open Enrollment, we thought it would be good to briefly summarize the main advantage and disadvantage of enrolling in an HMO.
The Primary Advantage of an HMO Plan
Price.
Typically an HMO plan will be less expensive than other health insurance plans. You often save money not only on the monthly price, but also in the form of lower copays and other out-of-pocket expenses.
The Primary Disadvantage of an HMO Plan
Network.
HMO plans do not give you the flexibility of the PPO plans that many people have become accustomed to using. You are limited to a smaller [typically
local] network of providers – usually a particular hospital system. Additionally, visiting a specialist typically requires a referral from your primary care doctor.
Should You Choose an HMO Health Insurance Plan?
As always, the details matter and the particulars of your own needs and situation will dictate what you should do when it’s time to choose a health insurance plan.
If you’re content with getting your medical care from the same hospital system [i.e. the network being
provided], then the HMO will almost certainly give you more value for your dollars in terms of both the monthly cost and your out-of-pocket expenses for healthcare.
If, however, you want more options for providers, or you’re already established with a doctor[s] outside of the HMO network, then you might be best to avoid the HMO carrier and choose a plan with a PPO network.
As always, AC Forrest can help you think through the options and get some specific numbers on costs and
benefits.
Contact us to talk today!
HMOs and PPOs are distinct health insurance plans and networks. While they both can provide their members with high-quality healthcare, they each have their own advantages and disadvantages. Before you select a health plan for your staff, make sure you know the differences between HMOs and PPOs.
PPOs Typically Give Consumers More Healthcare Freedom
A Preferred Provider Organization [PPO] typically offers a broad network of physicians, hospitals, and medical providers. With a PPO, you do not need a referral from your primary care physician before seeking most medical care. You can also elect to treat with an out-of-network doctor — for an additional cost.
Most Health Maintenance Organization [HMOs], in comparison, have a smaller physician network within a specific geographic region. With an HMO, you typically must treat within its network — unless you need emergency care. If you do treat out-of-network, you will likely have to pay all related bills.
HMO Members Must Have a Primary Care Physician [PCP]
A primary care physician [PCP] oversees and guides a patient’s healthcare decisions. Typically, with an HMO, you must designate an in-network PCP. Unless you need emergency healthcare, you must see your PCP or get a referral before seeing another doctor — even for routine care.
However, there are significant benefits to PCP-based care. When you have consistent contact with a single physician, he or she will get to know you, your medical history, and your health goals. This familiarity might lead to better and more patient-focused medical care.
HMOs Offer Lower Cost Healthcare
Because HMOs only cover in-network medical treatment and negotiate lower prices with their provider networks, their costs are typically lower. This includes both premiums [the monthly fee you pay for coverage] and out-of-pocket costs, such as co-pays [a fee you pay at each doctor’s appointment]. Some HMOs do not have a deductible, which is the amount of money you must pay for medical treatment before your insurance company starts to pay some or all of your bills.
In comparison, PPOs are more expensive. In exchange for a larger network of physicians and more freedom, members typically pay a higher monthly premium. Out-of-pocket costs will vary dramatically, depending on your plan and healthcare choices. For example:
- PPOs typically have a higher deductible than an HMO
- Co-pays and co-insurance are common with PPOs
- Out-of-network treatment is typically more expensive than in-network care
- The cost of out-of-network treatment might not count towards your deductible
As healthcare costs rise, PPOs are becoming less attractive to employers and consumers and more people are choosing other options. Depending on your plan, you might have to pay your medical bills and submit a claim for reimbursement with your PPO. With an HMO, the plan typically pays your in-network physicians and medical providers directly.
Choosing Between an HMO and PPO
The healthcare industry is constantly changing. While there used to be a lot of distinct differences between HMOs and PPOs, the lines have blurred. Some PPOs offer very limited out-of-network options, and some HMOs now cover out-of-network care. Before you select either an HMO or PPO, you should carefully review the plan documents, assessing its costs, quality, and scope of coverage.
Additionally, you should always choose a healthcare plan that meets your employees’ needs. You should ask yourself:
- Are our employees satisfied with their current healthcare plans? Are there gaps that need to be filled?
- Do our employees travel extensively? Will the HMO or PPO cover medical care outside our home region?
- Does the HMO or PPO’s network cover most of our employees’ preferred physicians and hospitals?
- What is more valuable: increased treatment options or cost savings?
- Would our employees benefit from PCP-directed medical care?
- Are our employees willing to complete reimbursement forms?
Depending on your answers to these questions, an HMO or PPO might be best for you and team.
References:
2017 employer health benefits survey [2017, September 19]. The Henry J. Kaiser Family Foundation. Retrieved from //www.kff.org/report-section/ehbs-2017-section-1-cost-of-health-insurance/