Article by William Lorenz, CA Insurance
License 0D61899 - Copyright 2006
HMO vs.
PPO
An HMO is a Health
Maintenance Organization and it consists of medical groups that
you become a member of. You select a Primary Care Provider (PCP) in
that group and you must see that doctor (or someone in his group)
first when you need to go in for an office visit. If you need a
specialist, you must get a recommendation from your PCP and the
recommended specialist must also be in the HMO network that you are a
member of. If you see any provider outside of the HMO network,
their is no coverage by the insurance company.
A PPO is a Preferred Provider
Organization. With the PPO plan, you are encouraged to go to a
doctor in the PPO network, as the percentage of coverage that the
insurance company pays is greater than going to a doctor outside of
the PPO network. But, if you decide to go to the best knee surgeon or
cardiologist in the country, you have the luxury to do that and still
have the insurance company pay their portion, but at the "out of
network" rates.
An Indemnity plan is a plan that
lists specific procedures, hospitalizations and illnesses that they
will cover. Generally speaking, they are not comprehensive plans and
often contain holes that may leave you with excessive out of pocket
medical expenses and we do not recommend nor quote any indemnity plans
on this web site.
First of all, let's dispel the
common myth that "PPO plans are more expensive than HMO plans"...
The reality is that for individual health insurance plans,
most PPO's are more affordable then most HMO plans. Most people
think otherwise, because with a PPO you have much more flexibility on
which doctors you can see, which is true. However, the reason HMO's
are generally more expensive is because they cover a lot more, with
less out of pocket costs. For example with most HMO plans, when you go
to a doctor and need a lab or x-ray, all fees are included with your
office visit copay. This is typically (almost always) not the
case with a PPO when it comes to labs and x-rays. With a PPO, you
almost always have a deductible to pay before the insurance company
pays for any of the lab fees. So for a family with children that get
sick often, it may be a wise decision to go with an HMO, because
generally speaking, you can simply pay the office visit copay and not
be inundated with additional out of pocket costs for any additional
labs or x-rays, etc., that may be needed. Another strategy may be to
put the kids on an HMO and put the adults on a more affordable PPO, to
help meet your budget. We are happy to discuss these options with you.
If you are the type of individual,
couple or family that rarely goes to the doctor, I recommend an
inexpensive PPO that covers major medical expenses (hospitalization,
surgeries, etc), but requires you to pay out of pocket for the smaller
items, such as office visits and labs and x-rays, for those rare times
you just need to go in and see a doctor. See "Affordable PPO
Plans" below. If you like PPO's, but want more comprehensive
coverage, see "Comprehensive PPO Plans" below.
Brand
Name Drug plans Vs., Generic Only or No Drug Plans
Considerations for Prescription drug
coverage... There are some plans out there that either don't
cover ANY prescriptions or only cover generic prescriptions. Be aware
that even though you don't require a brand name prescription today,
you may require one tomorrow. Keep in mind that there are some very
expensive brand name drugs for certain illnesses that you may one-day
need (such as insulin, cancer drugs, allergy medicines, or even aids
medications!). Once you are diagnosed with a condition requiring
brand name drugs, you probably no longer qualify medically to switch
to a plan that does cover brand name drugs. So even if you need
to pay a little more for brand name coverage now, it is the safest way
to go. Also, be sure the plan you select does not limit your
Rx benefit to a very low annual maximum. Therefore, I
recommend plans that
DO cover brand name drugs.
Maternity considerations
Even though you may not be planning to
have children at this time, if you are a female of child bearing age
or a couple or family that would like to one day start a family, you should
consider only plans that cover maternity. Imagine if you go with a
plan that doesn't cover maternity and you get a pre-existing condition
and are unable to qualify for a new plan later, when you decide that
your are ready to start a family. Plan ahead by getting a plan that
covers maternity, if it is even a remote possibility. Unfortunately
there are very few PPO plans that cover maternity, so you may have
to go with a more expensive HMO plan or a high deductible PPO or HSA
plan.
Hint: If you are looking for
family coverage, put the "mom to be" on a plan that offers maternity
and the rest of the family on a non-maternity plan. That will
minimize your combined premium.
Recommended Affordable
PPO Plans
To see our agency recommended plans,
click here.
If you have any additional
questions, please don't hesitate to call.
There are no fees for our services!
Call us direct at
(800) 610-6418
Bill Lorenz
California Insurance Lic. 0D61899
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