HMO or PPO: What’s the Difference for Individual Health Insurance

Both HMOs and PPOs are managed care plans and are less expensive than FSS plans and POS plans. HMO stands for Health Maintenance Organization and PPO stands for Preferred Provider Organization. FSS and POS are Fee-for-service plans. FSS and POS are the traditional type of insurance with which you pay for provider and get reimbursed for your expenses after filing a claim. HMO and PPO plans are more common now. HMOs are usually cheaper and you only pay a copay for the office visit (usually anywhere between $20 and $60 depending on the plan). Your primary care provider (or PCP) needs to be within a network of doctors under your health plan. You also need to have this primary care provider (your general practitioner or doctor) provide referrals if you need to see a specialist. The specialist also needs to be a part of the network. With a PPO you don’t require PCP referrals and can go outside of the network. If you do stay in the network, however, you can get 100% of the care covered (only 80% out-of-network) after meeting a deductible. With both types of overage there is a maximum for out-of-pocket expenses (not counting copay and monthly premiums). After you reach the maximum, the insurer pays 100% of costs.