PPO or HMO? Decide With Your Own Doctor List

Most people pick between a PPO and an HMO by looking at the monthly premium. That is understandable, and it is usually the wrong place to start. The question that decides whether a plan works for you is simpler: can you keep seeing the doctors you already see, and will your prescriptions be covered the way you expect?

This article explains the difference between the two plan types in plain terms and then shows how Dagan Martinez-Vargas of CHA Lifeguard uses a client's own doctor list to make the decision.

What an HMO usually means

An HMO generally covers care only from doctors and hospitals inside its network, except in emergencies. You usually choose a primary care doctor, and in many HMOs you need a referral from that doctor before seeing a specialist. In exchange, HMO premiums are often lower.

What a PPO usually means

A PPO covers in-network care and usually some out-of-network care, at a higher cost to you. You can typically see a specialist without a referral. The flexibility usually comes with a higher premium.

Rules vary by plan, so read the plan documents. These are general patterns, not guarantees.

Start with your doctor list

Write down every provider you and your family see in a normal year: primary care, pediatrician, OB-GYN, dermatologist, cardiologist, physical therapist, the hospital you would choose. Add the pharmacy you use.

Now check each plan you are considering against that list. Plan networks are published in provider directories, and they change, so the check should be done for the plan year you are buying. A broker does this as part of the comparison.

If every provider is in an HMO's network and you do not mind getting referrals, the HMO may be the better value. If one or two important providers are missing, the PPO's out-of-network coverage may be worth paying for, or a different HMO might include them.

Then check your medications

Each plan has a formulary, the list of medications it covers, arranged in tiers. The same drug can be inexpensive on one plan and costly on another. Check every regular prescription against each plan's formulary before you decide.

Then look at total cost

Only now compare prices, and compare the whole year, not the month. Add up the premium, the deductible you would likely meet, typical copays and the out-of-pocket maximum. For someone who uses care often, the plan with the higher premium can be cheaper over the year. For someone who rarely sees a doctor, the reverse may be true.

When the answer is still not obvious

Sometimes two plans come out close. In that case ask yourself how much you value booking a specialist directly, whether you travel outside your home area, and how much financial surprise you can absorb in a bad year. Those answers usually break the tie.

Get a second set of eyes

An independent broker compares plans from more than one carrier and does the network and formulary checks against your actual list. Dagan does this in the "Speak About Health Insurance" meeting. Book a health insurance call or read the overview of health insurance help in Austin.

Plan availability, benefits and costs vary by carrier, county and plan year.