HMO vs. PPO

Two of the most common acronyms you will encounter in health insurance are HMO and PPO.

Knowing the difference between these two terms and the plans they represent can help you make the best choices regarding your insurance.

What the acronyms stand for

• HMO stands for Health Maintenance Organization.
• PPO stands for Preferred Provider Organization.

In both cases, you will have access to a specific network of doctors, hospitals and other healthcare professionals and facilities. The difference between the two types of plans is how you interact with your healthcare network.

What to know about HMOs

HMOs are the more rigid choice. With this plan, you access your care network through your primary care physician, except in cases of emergency or for OBGYN care.

This means that you must see your primary care physician and receive a referral before you see other specialists. Additionally, the specialist you see must be within your network unless your insurance provider makes an exception.

For example, if you were experiencing gastrointestinal distress you could not go directly to a gastroenterologist. Instead, you would see your primary care physician, explain your problems and ask to be referred to the specialist.

While this seems like it is more work than is necessary, it can actually mean less paperwork for you to deal with and lower healthcare costs.

What to know about PPOs

PPO plans are more flexible. There is no need to get a referral from your primary care physician to access a specialist; you simply choose the doctor you want to see and schedule an appointment. You can also work with those outside of your network if needed, but this will result in higher co-pays and less coverage.

This means that if you experience gastrointestinal distress and you are not confident that your primary care physician can treat it, you can simply find a gastroenterologist and schedule an appointment. The process can be simpler, but it does mean more paperwork on your part and it can result in higher costs.

Which is better?

Both HMOs and PPOs offer access to quality healthcare. Allow personal preference and budget to decide if you like the centralized control of an HMO or the more flexible PPO.