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PPO vs HMO Insurance

PPO vs HMO: Which one's better? Our blog examines both of these forms of insurance, and Medicaid as well. The Edge accepts most major insurance.

PPO vs HMO: How PPO & HMO Insurance Affect Your Recovery

Table of Contents

Written by

Brian MooreBrian Moore

Content Writer

Reviewed by

Jeremy ArztJeremy Arzt

Chief Clinical Officer

June 29, 2023

The Edge Treatment Center

In the United States, health insurance is a type of insurance coverage that helps in covering medical costs incurred by an individual or family. In addition, it aims to offer financial security for an unforeseen illness or injury.

Although some government-sponsored programs, like Medicare and Medicaid, also provide coverage for eligible individuals, health insurance in the US is primarily provided through private insurance companies.

The United States has a relatively high insurance penetration rate compared to other nations. The United States has many different types of health insurance, including government, short-term, and catastrophic health insurance. Employer-sponsored health insurance is a type of health insurance that is provided by an employer to its employees and their dependents. Individual health insurance is purchased directly by an individual or family from an insurance company.

By establishing health insurance markets where people can buy coverage and enforcing that most people have health insurance coverage, the Affordable Care Act (ACA), often known as Obamacare, has increased access to health insurance in the United States.

However, many people are still uninsured, particularly regarding health and life insurance. In addition, the accessibility and cost of insurance also differ based on factors like income level, location, and employment status.

By the Numbers:

According to data from a Forbes survey on life insurance, at least three-fourths of American individuals carry some kind of life insurance. 

PPO vs HMO: What Is PPO Health Insurance?

PPO health insurance is managed care health insurance that provides its members with a list of healthcare providers at a lower cost. As part of this plan, the insurance carrier has agreements with preferred providers, including healthcare organizations including hospitals, clinics, and physicians.

PPO health insurance allows customers to select medical professionals outside of the network, although at a greater cost. However, customers will pay less if they decide to get treatment from a doctor or hospital in the preferred providers' network.

PPO vs HMO: How PPO Is Different From HMO

PPO health insurance plans often have a premium that the subscriber must pay before the insurance coverage begins. The insurance provider will pay a portion of the costs of medical care obtained from preferred providers once the deductible amount is satisfied, with the subscriber responsible for paying the remaining balance. The term "co-insurance" refers to the percentage of medical expenses that the insurance provider covers.

In addition to co-insurance, PPO health insurance plans may also include co-payments, which are one-time fixed costs incurred by the subscriber at the time of service. For example, prescription medicines, and other medical services, including visits to healthcare professionals like doctors or specialists, may all require co-payments.

PPO vs HMO: Benefits of PPO

One of the benefits of PPO health insurance is that consumers have greater freedom in selecting their medical providers than they would with other managed care plans, such as HMOs (Health Maintenance Organizations). In addition, for people who live in remote locations or travel frequently, PPO plans also often include wider provider networks.

In contrast to other kinds of health insurance, PPO plans also have greater out-of-pocket expenses. In order to ensure that the plan covers specific medical procedures, members may also need to get pre-authorization from their insurance provider. Before enrolling, people should carefully research the terms of a PPO plan to ensure it fits their financial and medical needs.

What Is HMO Health Insurance?

Health maintenance organization insurance is a kind of health insurance that offers medical services via an HMO network of healthcare providers. HMO plans often require members to select a primary care physician (PCP), who monitors their whole healthcare requirements and makes necessary recommendations to specialists within the network.

Unless there is an emergency or the HMO allows an out-of-network referral, HMO health insurance subscribers are restricted to medical care from healthcare providers inside the HMO network. The HMO network consists of medical specialists, facilities, clinics, and other healthcare organizations with contracts with the HMO to offer medical services to members at a discount.

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PPO vs HMO: How HMO Is Different From PPO

Subscribers to HMO health insurance plans often pay a monthly premium, a co-payment for every medical service used, and an annual deductible. The annual deductible is the sum the subscriber must pay out-of-pocket before the HMO begins covering approved medical expenses.

PPO vs HMO: Benefits of HMO

One advantage of HMO health insurance is that it frequently offers reduced out-of-pocket expenses compared to other kinds of health insurance plans. HMOs also promote preventative care and well-being by offering free or inexpensive treatments like yearly examinations and vaccinations.

However, HMO health insurance plans may have limited provider networks, making it difficult for subscribers to receive care outside of their network or in areas with few HMO providers. In addition, HMO plans may require pre-authorization from the HMO before receiving certain medical services, and referrals from the PCP may be required before seeing a specialist.

PPO vs HMO: What Are the Different Coverage Levels?

Various levels are frequently assigned depending on how much coverage a PPO or HMO plan offers. These tiers are often Platinum, Gold, Silver, and Bronze. The features of each level are as follows:

PPO vs HMO: Platinum

Platinum plans are the most comprehensive and have the most expensive premiums. Platinum plans can be a wise solution if you need frequent medical attention or have a chronic ailment that needs continuous treatment. These plans often have low deductibles and co-payments, covering 90% or more of your medical expenses.

However, while they provide the widest coverage, they are also the most expensive.

PPO vs HMO: Gold

While providing a slightly lower level of coverage than Platinum plans, Gold plans still offer a high level of coverage. With a slightly higher deductible and co-payments than Platinum plans, these policies typically cover 80% or more of your medical expenses.

Gold plans can be a decent option if you require a lot of medical attention but don't want to pay the hefty rates for Platinum plans.

PPO vs HMO: Silver

Silver plans offer a moderate coverage level and lower premiums than Gold or Platinum plans. These plans typically cover around 70% of your healthcare costs, with a higher deductible and co-payments than Gold plans but lower than Bronze plans.

Silver plans may be a good choice if you don't require a lot of medical care but want a reasonable amount of coverage.

PPO vs HMO: Bronze

Bronze plans offer the lowest level of coverage and have the lowest premiums. These plans typically cover 60% of your healthcare costs, with the highest deductible and co-payments. Bronze plans may be a good choice if you are generally healthy and don't require much medical care but want protection in case of a major medical event.

PPO vs HMO: What Are Other Health Insurance Options?

Apart from HMO and PPO health insurance plans, there are several other options available, including:

HDHP (High Deductible Health Plan) Health Insurance

HDHP plans are designed to provide lower premiums and higher deductibles. Subscribers are responsible for paying more out-of-pocket before the insurance coverage kicks in. These plans are typically paired with a Health Savings Account (HSA), allowing subscribers to save tax-free money to pay for qualified medical expenses.

EPO (Exclusive Provider Organization) Health Insurance

Similar to PPO plans, EPO plans to offer a network of preferred providers. However, unlike PPO plans, EPO plans do not cover out-of-network providers except in emergencies.

Catastrophic Health Insurance

Catastrophic health insurance provides minimal coverage for major medical events, such as hospitalization or emergency room visits. These plans typically have high deductibles and low premiums.

POS (Point of Service) Health Insurance

POS plans combine aspects of both HMO and PPO models. While POS plans, like HMOs, require members to select a primary care physician, they also give members the option of paying more for care from non-participating doctors.

Short-Term Health Insurance

Short-term health insurance plans provide temporary coverage for individuals between jobs or waiting for their employer-sponsored health insurance to start. These plans typically have limited coverage and are not required to comply with the Affordable Care Act's regulations.

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PPO vs HMO: Difference Between PPO Health Insurance vs HMO Health Insurance

PPO (Preferred Provider Organization) and HMO (Health Maintenance Organization) are two types of managed healthcare plans. They differ in network, cost, referrals, out-of-network coverage, and flexibility. Here's a more detailed explanation of the differences:

PPO vs HMO: Network

Compared to HMO plans, PPO plans include a larger network of healthcare professionals. In addition, with a PPO plan, you can often select within and outside network medical facilities. This means you can still see your preferred healthcare provider even if they are not part of the PPO network, but you might have to pay more cash. On the other hand, HMO plans require you only visit the doctors and hospitals that are a part of their network. This may be restricting, especially if you require specialist medical treatment or live in a remote place.

PPO vs HMO: Out-of-Network

PPO plans often provide out-of-network cover, allowing you to visit physicians or use hospitals outside of the PPO network, though you might have to pay more. Except in extreme cases, HMO plans typically do not cover care received outside of the network. This implies that you might have to spend a large sum out of pocket for healthcare services if you travel frequently or live in a region without any HMO network providers.

PPO vs HMO: Referrals

HMO plans require you to have a primary care physician (PCP) who acts as a gatekeeper for your healthcare needs. This means you must get a referral from your PCP before seeing a specialist or receiving any other type of medical care. This can be a hassle for some people, especially if they have a chronic condition that requires frequent specialist visits. PPO plans do not require referrals; you can see any specialist or healthcare provider you want without prior approval. This can be beneficial if you need specialized care and want to avoid the extra steps involved in getting a referral.

PPO vs HMO: Cost

PPO plans tend to be more expensive than HMO plans. PPO plans usually have higher premiums, deductibles, and copays than HMO plans. However, PPO plans may also offer more flexibility and freedom to choose your healthcare providers, which can be worth the extra cost for some people.

PPO vs HMO: Flexibility

HMO plans to provide greater structure and a more comprehensive approach to healthcare management, while PPO plans to allow more freedom in terms of selecting your healthcare providers. You can visit any hospital or doctor you want with a PPO plan, and you don't need a referral to see a specialist. However, you must select a PCP under an HMO plan who will manage your treatment inside the HMO network while coordinating your medical needs. This can be beneficial if you prefer a more coordinated approach to healthcare, but it may be restrictive if you prefer to have more freedom in your healthcare provider choices.

PPO vs HMO: How to Choose Between Them

Choosing between an HMO (Health Maintenance Organization) and a PPO (Preferred Provider Organization) health insurance plan depends on your healthcare needs, preferences, and budget. Here are some factors to consider when choosing between the two:

Cost

Although HMO plans usually have lower out-of-pocket expenses and premiums, you must select a primary care physician and get a referral before visiting a specialist. PPO plans often have higher premiums and out-of-pocket expenses, but they offer you more freedom to choose the doctor you want to visit without requiring you to ask for a recommendation.

Network

HMO plans usually have a more limited network of healthcare providers, while PPO plans have a larger network. If you have a preferred healthcare provider or specialist that you want to see, check if they are in the network of the plan you are considering.

Prescription Drug Coverage

Check if the plan covers the prescription drugs you need and if coverage has any restrictions or limitations.

Healthcare Needs

Consider your current and anticipated healthcare needs. An HMO plan may be a good choice if you have a chronic condition or require regular medical care since it often provides more coordinated care. If you have a high-risk job or participate in sports, a PPO plan may be a good choice since it allows you to see specialists without a referral.

Lifestyle

Consider your lifestyle and how often you travel. HMO plans may not cover healthcare services outside of the plan's area, while PPO plans may cover healthcare services received anywhere in the country.

Flexibility

Consider how much flexibility you need in choosing healthcare providers and how important it is to you to have the ability to see out-of-network providers. If you value more flexibility in your healthcare choices, a PPO plan may better fit you.

PPO vs HMO: Which One’s Better?

For most people, the flexibility PPO plans offer is more attractive. According to the Kaiser Family Foundation Employer Health Benefits Survey, 49% of workers used PPO plans as opposed to only 16% for HMOs.

However, that’s not really the answer to the question. When judging PPO vs HMO, your own personal preference is the best idea.

Here’s some tips:

PPOs Are Best for Flexibility

You don’t have to select a primary care doctor in a PPO. What’s more, you don’t need a referral to see specialists. Also, PPO networks are much, much larger, with a bigger selection of specialists, physicians, and even facilities. Finally, PPO plans generally offer some coverage for out-of-network doctors.

HMOs Are Best for Cost

HMO costs are much less when compared to PPOs. Also, the premiums are much lower, and there’s fewer (or no) deductibles. However, HMO insurance isn't as widely accepted.

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What Is Medicaid?

Medicaid is a public health insurance program that provides healthcare coverage to low-income individuals and families. The federal government funds the program, which is administered by each state according to its own standards and eligibility criteria.

Eligible individuals can access coverage for a wide range of medical services, including primary care visits, hospitalizations, prescription medications, mental health treatment, and more. In addition to providing access to quality healthcare, Medicaid also assists with long-term care planning for elderly or disabled individuals who need extra support. With Medicaid funding, these populations can receive necessary home and community-based services like nursing home care and assistive technology devices that enable independent living.

Ultimately, the goal of Medicaid is to ensure that all Americans have access to affordable healthcare regardless of income or medical condition.

What Are the Eligibility Requirements for Medicaid?

To qualify for Medicaid, an individual must meet a number of criteria, including income level, age, disability status, and citizenship. Each state has its own specific requirements and definitions that determine who can access coverage under the program. Generally speaking, individuals with low incomes are more likely to be eligible for Medicaid than those with higher incomes.

In addition, certain populations like pregnant women, children under 19 years old, elderly adults over 65 years old, and individuals with disabilities may also qualify regardless of their income level.

It is important to note that each state uses different methods when calculating household income levels and determining eligibility status so it’s important to check your state’s rules and regulations.

What Services Does Medicaid Cover?

The list of services covered by Medicaid varies by state but typically includes a wide range of essential healthcare needs such as doctor visits, hospitalizations, preventative care, prescription medications, mental health treatment, long-term care planning, and much more. Some states may also provide additional coverage for dental care or vision exams. It is important to note that some services may be limited depending on the individual’s eligibility status or financial resources.

Overall, Medicaid provides invaluable access to quality healthcare and long-term support to individuals and families who would otherwise struggle to afford it on their own. By understanding what the program covers and who qualifies for assistance, you can make an informed decision about your healthcare needs.

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PPO vs HMO: The Edge Treatment Center Accepts Most Major Insurance

The Edge Treatment Center will happily work with you to make sure you receive the services you need. Our evidence-based, effective treatment plans treat mental disorders, drug addiction, and dual diagnosis. With affordable housing options available, there’s no better place to heal from addiction and mental health issues. We happily accept PPO insurance as well.

We know treatment saves lives. Reach out to The Edge Treatment Center today to learn more about our insurance plans and more.

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