Which is better, an HMO or a PPO?

Question:

Which is better, an HMO or a PPO?

Answer:

The question really is, which type is better for you? If you’re able to choose between a health maintenance organization (HMO) and a preferred provider organization (PPO), you’ll need to evaluate the coverage that each offers and determine which one best suits your needs. Although both HMOs and PPOs are types of managed care systems, each manages health care differently.

HMO members have to pick a primary care physician (PCP), who provides general medical care and referrals to specialists. Both the PCP and any specialists you see must belong to the HMO network. The PCP must approve your request to see a specialist. PPO members aren’t required to choose a PCP and can see a specialist without a referral.

Out-of-network care (except for emergency care in some situations) is generally not covered by an HMO. A PPO won’t require you to receive care within the network, but you’ll save money if you do. For instance, the PPO may reimburse 90 percent of your health-care bill if you saw a doctor within the network, but only 70 percent of your bill if you saw a doctor outside the network.

HMO members usually pay a small co-payment for care (e.g., $10), but aren’t required to meet an annual deductible. If you belong to a PPO, you may have to meet a deductible (especially for hospitalization) and pay a larger co-payment (e.g., $20) than an HMO member when you receive care.

So what it boils down to is flexibility versus cost. If you routinely need to see specialists, travel a lot, or are willing to pay more to see whatever health-care provider you choose, then a PPO might be the right choice. But if saving money on health care is your main concern and you’re not worried about access to specialists of your choice, consider joining an HMO.