HMOs and PPOs in Health Insurance
Which type of plan is best?
This article explains the four basic types of managed care plans, including HMOs and PPOs, and goes through the major advantages and disadvantages of each one.
You’ll also learn about plans that give you more freedom to choose your own doctors and hospitals than managed care plans.
What is Managed Care?
Managed care plans are health insurance plans that contract with doctors, hospitals, clinics, and other providers to provide services at discounted rates.
These discounts get passed on to plan members in the form of lower premiums compared to fee-for-service plans.
Types of Managed Care Plans
Managed care plans come in four basic forms: Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Point of Service (POS), and exclusive provider organizations.
Each type offers unique benefits and challenges, influencing both the cost and flexibility of accessing healthcare services.
Learn More: Escape From Narrow Healthcare Networks – How You Can Choose Your Own Doctor
Compare Pricing on the Best Insurance Plans Available
Health Maintenance Organizations (HMOs)
HMOs are known for their structured approach to healthcare, offering lower premiums and out-of-pocket costs while emphasizing preventive care.
Enrollees must select a primary care physician (PCP) who serves as the main point of contact for all health needs and referrals. This model fosters a close patient-physician relationship and streamlined care.
However, the major downside of HMOs is the restriction to network providers; seeing doctors outside the network is rarely covered, and getting specialist care requires a referral from the PCP, potentially delaying treatment.
Preferred Provider Organizations (PPOs)
PPOs offer a more flexible approach compared to HMOs, allowing enrollees to choose doctors both within and outside of the network without needing referrals for specialists.
This flexibility is appealing to those who might need direct access to various specialists or who travel frequently.
While PPOs do cover out-of-network care, it comes at a higher cost, with premiums and out-of-pocket expenses generally exceeding those of HMO plans.
The increased cost can be a significant disadvantage for individuals seeking a balance between flexibility and affordability.
Exclusive Provider Organizations EPOs
Exclusive Provider Organizations (EPOs) are a type of managed care plan that combines elements of HMOs and PPOs but with distinct features.
Like HMOs, EPOs require members to utilize a network of specified providers for all their healthcare needs to receive coverage, and going outside this network typically results in no coverage except in emergencies.
However, like PPOs, EPOs generally do not require members to select a primary care physician or obtain referrals to see specialists.
This structure provides a balance of cost containment through a limited provider network while offering the flexibility to see specialists directly, making it a suitable option for individuals who prefer direct access to all types of healthcare providers without the need for preliminary steps.
Point of Service (POS) Plans
POS plans blend elements of HMOs and PPOs, requiring a primary care physician for all referrals but permitting out-of-network care under certain conditions.
Like HMOs, POS plans offer lower costs for in-network services but provide the option to go outside the network for a higher fee. This makes POS plans versatile, though managing the differences between in-network and out-of-network care can be complicated and costly.
The need for referrals can also restrict immediate access to specialists, similar to HMOs, posing a challenge for those requiring specialized treatment.
The Health Sharing Alternative
If you don’t want to be confined to any limited provider network, another option to consider is a health-sharing plan.
These plans are not traditional insurance but rather a cooperative arrangement among individuals who share similar values or religious beliefs. Members of health-sharing plans contribute monthly amounts that are used to pay for the medical expenses of any member in need.
One of the main attractions of health-sharing plans is the flexibility they offer in choosing healthcare providers. There are no network restrictions, so you can choose any doctor or healthcare service that aligns with the guidelines of your health-sharing community.
Learn More: Why Smart Consumers Are Opting Out of Obamacare And Joining Healthshare Programs Instead
Furthermore, if you’re among the millions of Americans who don’t qualify for a subsidy under the Affordable Care Act, you may be able to save a significant amount of money each month by opting for a health sharing plan, rather than a traditional health insurance plan like the Obamacare managed care plans.
Most insurance brokers can’t sell health sharing plans. They strictly focus on selling higher-priced traditional health insurance products.
But HSA for America’s Personal Benefits Managers are among America’s leading experts on health sharing solutions.
Learn More: How Much Money Can Health Sharing Save?
Compare Pricing on the Best HealthShare Plans Available
HMOs and PPOs: Choosing the Right Plan
Each type of managed care plan has its distinct setup, influencing how patients access care and manage their health expenses.
Choosing the right plan involves weighing these factors against personal healthcare needs and financial circumstances.
For personalized help choosing the right plan for you and your family or even your small business, contact a Personal Benefits Manager today.
We’ll go over your individual situation and budget, and help you determine which type of plan available in your area works best for you.
For Further Reading: Best Healthshare Plans Comparison Guide 2024 | High Deductible Health Plans are Good, Actually | The Battle For Our Time: Fighting for Healthcare Freedom
