Understanding the Differences Between HMO, PPO and HSA
Shopping around for health insurance can be a whirlwind of confusion. There are many companies who offer several packages at different prices, which can be an overwhelming amount of information to sort through, and trying to make sense of a bunch of complicated acronyms; it’s almost too much to take in! Luckily, most health insurance plans tend to fit into 3 main categories: HMO, PPO, and HSA. Each type of insurance has its own benefits, but to find out which one might work best for you, you will have to take into consideration how you have used your health care in the past. To simplify the potential confusion, we have broken down each type of plan into plain English. Checkout our ‘cliffs notes’ to healthcare plans below: HMO – Health Maintenance Organization HMO stands for Health Maintenance Organization and is a type of plan that is best suited for young families or subscribers who frequently use medical services such as doctor visits or prescription filling. With an HMO you are required to choose a Primary Care Physician or PCP who serves as the coordinator for all of your health care needs. For example, if you develop an allergy and need to see a specialist you would first need to see your PCP and be referred to a specialist. With an HMO, you are not eligible to seek any medical care outside of the network provided by your PCP unless it is a true medical emergency. Also, if for some reason you want to change your PCP, you must first notify your insurance company who must process the change before you can see your new PCP. In general, HMO premiums tend to be high, however, the out of pocket cost (or co-pay) for using medical services is lower. There are also some HMO facilities that organize all medical services in one facility, such as Kaiser, meaning you could go see your doctor, get lab work done, and fill your prescription all in the same place. PPO - Preferred Provider Organization A PPO or Preferred Provider Organization plan allows you to receive medical care from any doctor you choose, even if they are outside the network of your health care provider. You do not need to be referred to a specialist or specific hospital, giving you more control and flexibility than an HMO. With PPO plans the monthly premium is generally lower, however, the co-pay would be higher as you may not be covered with an out of network doctor. Heath insurance companies that offer PPO plans have a lot of options to help customize your plan to best fit your needs, allowing you to choose your deductible and what your plan covers. This is a great option for any people who may not have as many health care needs and are interested in flexibility with their health care. HSA – Health Savings Account Lastly, an HSA or Health Saving Account is a combination of a high deductible health insurance plan (HDHP) and savings account. It allows you to pay a high deductible while saving for medical expenses that may arise, as well as reduce your taxable income. This type of plan is regulated by the government, and so in order to open an HSA you must first qualify. If you are enrolled in an HDHP as defined by the government, then you qualify. Health insurance companies commonly offer HSAs and in the case yours does not, you can set one up with most financial institutions. With an HSA, you are able to contribute a certain amount to a savings account every year. You can do this my setting up automatic deductions from your paycheck. Like any other account, you will receive checks and debit cards for you HSA to use when you have medical expenses you wish to pay for. The biggest advantage to having an HSA is 100% of every dollar you put into the account is tax free. There is a limit as to how much you’re able to put in every year, and it is updated every year. HSAs also have a lower monthly premium and high deductible. The basic idea of an HSA is for you insure yourself up the amount of the deductible and it met your health insurance will cover the remainder for your bills. This account is great option for those that are self-employed or for those who rarely have to use health insurance. Emplicity knows that managing healthcare plans that meet affordable care act requirements can be confusing. Our benefits experts can help you make sure you’re compliant with current legislation. Give us a call at 1-877-476-2339 or visit our website www.emplicity.com.