What do HMO, POS, PPO, & HDHP insurance types stand for? Which do I choose?

Question

I need health insurance but I don't know the terms or which one to choose. I am married but my husband said it would cost so much to add me to his work's insurance. My boss may set up some insurance for me from my work, I have no idea what to pick. Help?

Answer 1

HMO = Health Maintenance Organization

POS = Point of Service

PPO = Preferred Provider Organization

HDHP = High Deductible Health Plan

The best choice depends on how much you want to spend and the type of health care you anticipate using.  The HDHP would likely have the lowest premium (the amount you and your employer pay each month); however, you'd pay a large deductible (perhaps $4000) before your benefits kicked in.

[The deductible is the amount you pay before the insurance begins to cover your expenses.  For example, in a plan with a $200 deductible, you would be responsible for the first $200 of eligible expenses each year.  Once you had paid that amount, the health plan would begin covering any additional eligible expenses at a set level, perhaps 80% or 90%, with you being responsible for the remaining 10% or 20%.  Most HDHPs have a health care spending account (HSA) associated with them; you can deposit pre-tax earnings in the HSA (or your employer might even put some money in the HSA for you), which can help you pay the high deductible.  If your employer offers an HDHP, be sure you understand how it works and if there's also an HSA option.]

An HMO requires you to designate a primary care provider (PCP), who serves as a "gatekeeper," providing general health care and referrals to in-network providers as needed.  It is more restrictive than a PPO in that if you go to a doctor who is not in the network or even see an in-network specialist without a referral, your expenses will not be covered.

A PPO or POS plan means you can decide at the point of service--that is, when you need health care--whether to see an in-network provider and receive a higher level of benefits or an out-of-network provider and receive a lower level of benefits.  You may see specialists without a referral, and switch between in-network and out-of-network providers.  You do not need to designate a PCP.

If you rarely see a doctor, the HDHP might be the least expensive option for you.  If you're comfortable with a PCP directing your care, an HMO is another economical choice.  If you prefer to have more freedom of choice and see a variety of primary care doctors and specialists, a PPO would be the best choice, although it will be more expensive than the others.

Whatever plan you choose, if there's a provider network involved, be sure to check with your doctors (do not trust the health plan to have the most accurate, up-to-date information) to see if they are in the network.  If you have a favorite doctor and he/she is in the PPO but not the HMO network, that may influence your choice of health plan as well.

Answer 2

Regarding the above answer, the explanations are accurate, but the recommendation is off -- I see this all the time.  Anyway, you can't buy a policy and 'anticipate' an amount of usage.   "Yes, I think in the fall I'm going to be careless and slip down the stairs.  I'm sure I'll incur multiple fractures and need a few stitches...."  

When choosing ANY plan you need to compare to see what your total outcome would be (meaning total cost for expenses and insurance premiums) IF you had no medical bills, moderate medical bills, large, and extreme medical bills.

You MAY find the HDHP come out ahead every time...that's the case in my state anyway.  98% (guessing) of the plans sold out of my office are HDHP and I'd say close to that number of customers don't want one when they intially call.  The go for the plan once they understand that regardless of whether they go to the doctor a lot or a little that they have more money in their pocket at the end of the year.

Read the blog on my site about the 'Zero Deductible HSA' and that'll help you...

http://insurancepickle.com/blog/index.ph...

http://www.InsurancePickle.com

Answer 3

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