Free For Everyone

In case you have the possibility to opt for employer-sponsored group health plan there’s a really important decision to be taken. Most employers, especially big companies or small businesses within purchasing pools, offer their workers a wide range of plan types, which typically include both HMO and PPO health plans. Being the most popular of all plan types, these two have distinct features, and understanding the difference between them is really important for having adequate insurance coverage for you and your entire family. So let’s take a closer look at each to have better knowledge of pros and cons they deliver.

HMOs

Health Maintenance Organization (HMO) is an alliance of medical workers and facilities (doctors and hospitals) that have a contract with the insurance company for providing their services for a fixed price.

HMOs are generally regarded as having many rules and restrictions for their users. The person having an HMO plan is required to choose a single physician who will be responsible for all your healthcare matters. The primary physician should be a member of the HMO network, which means if your current doctor doesn’t make part of the association then you will have to find another one who does. In case you have to visit a specific specialist, you will first have to visit your primary doctor for a referral, otherwise you won’t get the care you need.

The definite benefit of an HMO plan is its price. It is much cheaper than any other health insurance plan type, having lower rates, premiums and typically free co-payments. This is a very attractive option, however you have to keep in mind that first of all there’s not much flexibility involved with HMOs, and doctors participating in them will usually have more visitors because they have to make up the low cost of the plan by servicing more people and get profit from that.

PPOs

Preferred Provider Organization (PPO) are also contractually bound to health insurance companies, but in a less restricted and organized way, giving much more flexibility to participants and users in comparison with HMOs.

Having a PPO plan allows you to see any doctor you wish to, however out-of-network doctors will cost you more to attend and will require more out-of-pocket spendings. PPOs also leave you without having to worry about referrals for seeing a specialist.

From the price perspective, PPOs are more expensive than HMOs. Still many people choose PPOs because their less restrictive nature and wider selection of specialists to attend if compared to HMOs.

You get what you pay for

If your financial situation is not that good it would be better to choose an HMO plan, because it’s cheaper and minimizes your out-of-pocket spendings. However, if you want a wider selection of doctors and facilities under your health insurance plan, then you will have to pay more for a PPO plan.

Selecting your physician

The established relationship between you and your family doctor also plays an important role in choosing between different plan types. If you are confident in your current doctor who has been managing your healthcare for years, and the specialist doesn’t make part of the HMO network, it will be better to get PPO health coverage. In case you’re not that attached to your current physician you can easily choose between PPO and HMO according to your financial situation. In either case, it is much better and wiser than having no insurance at all. So choose carefully.

The world is a complicated place and, more often than not, it does not work well unless the right people hold the key positions. When it comes to insurance, you might think the key people are the legislators who sit on the relevant consumer or finance committees. In reality, the key person is always the Commissioner who heads the state’s Department of Insurance. Every state has such a person and the department is responsible for regulating the insurance market in the state. It licenses companies to write policies and, where appropriate, sets the terms for the conduct of business. This is where the role gets political because some commissioners see their role as being protective of the insurance companies, while other aim for consumer protection. The difference in political attitude shows up most clearly in the complaints process operated in each state. If a complaint is found valid after an investigation, the commissioner has sweeping powers to order the insurer to correct the situation. So the first sign comes in the number of complaints held valid. Then comes the pattern of responses in promoting fair trade practices. Finally, there is the degree of publicity given to the results. Some commissioners publish annual reports. The best name and shame the companies, showing how many complaints have been upheld against each. Others simply give overall statistics without naming the companies. If you live in one of the best states, you can get detailed help on identifying the safest insurers with whom to do business. It is never enough just to get online quotes. Always get some background on the main companies writing policies in your state.

This makes it all the more sad that one of the best of the current commissioners is going to step down and move into a university post. This is Nonnie Burnes, a former Superior Court justice, who has been the commissioner in Massachusetts during a critical two-year period of time. It was her role to implement the state’s move to a competitive market for car insurance. This has seen a managed expansion from nineteen to thirty companies giving car insurance quotes and writing policies. She was also a pivotal figure in the debate over the rates for homeowner policies, particularly those applying to coastal areas more prone to storm damage and flooding. She imposed a full ban on the use of factors including the driver’s occupation and education level, credit scores, etc., instructing the insurers to focus on the safety record of each driver and their level of experience as the basis for fixing the premium rate. Now, if a university professor lives next door to an electrician, they both pay the same rate if their driving records are broadly similar.

Massachusetts is going to lose a person who has, for the most part, championed the rights of the consumer. Indeed, there is fear that unless the state legislature writes some of her regulations into law, the incoming commissioner may undo some of her good work. You should take a direct interest in your state’s department of insurance. If you are lucky, it will be a strong defender of your rights. Even if the commissioner is pro-insurer, there will still be many employed on the enforcement side who will investigate complaints thoroughly and push the companies to play fair on your policy.