Compare PPO vs. HMO for HDHP’s

The one sentence summary
When seeking medical care, a PPO allows you to schedule medical care directly to a larger network of providers, while an HMO requires you to see a primary care doctor who refers you to a specialists.

The Difference between PPO’s and HMO’s

Monthly Premium varies; slightly higher varies; slightly lower
Network Larger Smaller
Out-of-Network May cover a % Not covered
Co-pay Often Often
HSA eligible some some
Primary Care Physician No Yes
Specialist requires referral No Yes

(For a more detailed description, see What is a PPO? and What is an HMO?)

More details
PPO’s and HMO’s are types of health insurance; almost all health insurance plans are one or the other.

The main difference is in how you receive care. When you join an HMO, you choose a primary care physician who will be your first stop for all medical needs. For some ailments, they can treat you; for others, they will refer you to a specialist.

PPO plans do not require a referral from a physician. You simply schedule care with a medical provider (prescription drug service, doctor, lab, surgeon, etc.) that fits your needs. In this way, there is more choice and flexibility. PPO plans have a large network of choices and cover more for out-of-network care.

How to choose
Here is one way to choose between a PPO vs. HMO:

  1. Determine whether you require a primary care physician or not.  If yes, then you need an HMO.  If not, you can use either an HMO or a PPO.
  2. Get a bunch of quotes and look at the main variables.  Compare monthly premiums, co-pays, deductibles, co-insurance rates, and out-of-pocket max.  A great tool for this is eHealthInsurance as it allow you to compare numerous quotes in seconds
  3. Narrow down your choices and see how convenient the coverage is to your location and the quality of care offered.

Once you consider these variables, you should have a pretty good idea of which plan best fits your needs.

The big picture
You really can’t go wrong with whichever you choose. If you have an HMO, you will develop a trusted relationship with a physician who can refer you to the proper specialist as needed. With a PPO, you can act more independently and quickly schedule your care with a wider variety of providers. Personally, I would be more concerned with the plan’s price (monthly premium and out-of-pocket max) and how convenient the coverage is for my location.

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