Health care insurance consumers face a wide range of choices that settle into four basic groups: Indemnity or fee-for-service health insurance plans; Health Maintenance Organization (HMO) plans; Preferred Provider Organization (PPO) plans; and Point of Sale plans. Of these, the two most popular health insurance plans in California are HMO and PPO plans. Here is a more in depth look at these types of health care insurance.
As the name suggests, a Health Maintenance Organization is focused on maintaining health and preventing disease through ongoing “wellness” care. Popular among families with children, HMOs make it easy to receive immunizations, well child visits, screenings such as mammograms and Pap smears, and other types of preventative care. To make these services cost-effective, HMOs contract with a network of health care providers to follow guidelines regarding care and costs. To receive coverage, policyholders must receive medical services from health care providers in the HMO network.
To further control costs, HMOs rely on a group of experienced doctors, known as primary care physicians, to oversee the medical services provided to each health insurance plan member. With an HMO plan, the health insurance plan member chooses a primary care physician who provides as many medical services as possible. When the health insurance plan member needs to see a specialist, the primary care physician will make the referral. If an HMO policyholder visits a specialists and other medical care providers without a referral, the plan will not pay for the services.
A main advantage of an HMO is lower premium cost. In addition, HMOs charge set amounts, know as a co-payments, for various services, such as doctor’s office visits.
PPO stands for Preferred Provider Organization. In some cases, it stands for Preferred Provider Option or Participating Provider Organization. The terms refer to a managed care organization that, like an HMO, is made up of doctors, nurses, clinics, hospitals, and other health care providers who are bound by contract to provide medical services for reduced fees. Like HMOs, PPOs emphasize preventative care, including routine physicals and screenings such as mammograms, prostate exams, and Pap smears. Unlike an HMO, however, a PPO will pay at least a portion of medical expenses for services provided outside the network of preferred providers. This flexibility is of special value to individuals and families that want to maintain a relationship with a medical specialist, such as a pediatrician or gynecologist, outside the preferred provider network. However, the PPO pays less for medical services provided outside the network than it does for services provided within the network.
With a PPO, the health insurance company covers most health care fees, but the health insurance plan member must pay some additional expenses. These include:
The amount of medical expenses that a health insurance plan member must pay out of pocket each year before his or her PPO plan begins to pay for health care services. Deductible amounts vary from one health insurance company to another, and from one health insurance plan member to another, depending on a variety of criteria. Wilshire Health Insurance compares annual deductibles and premium rates to accurately calculate the true cost of your health care insurance.
An amount of a total medical bill that a health insurance plan member must pay even after the deductible has been met. Coinsurance is usually a percentage of the total amount.