PPO vs HMO vs HSA Pros and Cons
Compare PPO, HMO, HSA Health Plans Advantages and Disadvantages
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If you are searching for your own individual health insurance or choosing between options for your group major medical, you may not know what the difference between PPO, HMO, and HSA major medical health plans are. We have always felt that the more consumers know about their own health insurance, the more likely they are to enjoy the benefits of it.
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HMO: Health Maintenance Organization This type of insurance plan will restrict you to using a plan network for almost all of your covered medical services. In general, any services provided from outside this network will not be covered unless it is a special circumstance. Exceptions may be emergency treatment from outside the area of coverage or some procedures that the network does not contain a provider for.
Advantages of an HMO: In general, HMO plans do the best job of controlling medical costs. You will probably have the lowest copays for any covered services. Many people like the convenience of having a booklet with providers to choose from.
Disadvantages of an HMO: You must seek your medical services from a network provider if you want the insurance company to pay. This can be inconvenient and restrict your choices. Also, since an HMO provides so much coverage, you may be paying for more coverage then you want or need.
PPO: Preferred Provider Organization: This type of plan is a bit more flexible. It will contain a network of medical providers, and the health plan will offer the lowest rates and most comprehensive coverage if you stay inside the providers they control. You may choose to find a provider outside of the network, but accept that you will be covered at a lower rate. As with an HMO, the in-network difference will probably be waived in an emergency.
Advantages of a PPO: The health insurance company gets to control costs within the network, but you can still choose to use the out of network coverage if it is more advantageous for you to select a non-network provider.
Disadvantages of a PPO: You must accept lower coverage if you leave the network (except in an emergency). Again, you may be paying for more coverage then you want or need, though a PPO is usually a decent compromise.
HSA: Health Savings Account with a High Deductible Health Plan: These are higher deductible health insurance policies that are designed to work with a health savings account. Now an HSA can still work with a network, much like a PPO network, though that isn’t the basis of the plan.
HSA Advantages: Within limits, your HSA contributions will be tax deductible. Your contributions can be taken out without a penalty after retirement if you do not use them. The money in the HSA can earn interest too. It can also be used for a variety of medical services that may not be covered by normal health insurance plans. You will not be paying for a very high level of insurance coverage if you do not need to use it.
HSA Disadvantages: Franky, HSA plans sound great, but they just do not work out for everybody. For one thing, you must be a disciplined saver. If you have not put any money into your HSA account, then you will need to fund the higher deductible some other way!
NOTE: We cannot find one major medical plan that works for everybody. People who thought they would be thrilled with an HSA plan ended up switching to a PPO because they did not put money into savings like they thought they would. Others love HSA plans, and use them very well, and they would hate the restrictions of an HMO. Still others would rather have their health plan help them choose their doctors and other medical service, and they have no problem cutting costs by using a PPO or HMO network. Figure out what your own style is, compare health insurance rates, and then make a choice!
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The Importance of Comparing Health Insurance
If you need to shop for health insurance because you are self employed, a small business owner, or not covered by a group plan, then we have always stressed the importance of comparing individual health insurance plans! We believe we have the best individual health insurance quotes because you get to fill out a fast and safe online form one time, and then sit back and get competitive health insurance rates and plans in your area!
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If you are a good saver, then you will want to take advantage of a high deductible health plan with an HSA. If would rather just pay a larger premium, but know that most of your medical services will be covered, or covered with a small copay, then a lower deductible PPO plan with doctor’s visits is a good choice for you. If you do not mind using the health insurance company’s network for almost off of your medical services, and you would like the most control over your medical costs, consider an HMO plan if it is available in your area.
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Best Individual Health Insurance Quotes
To get the best individual health insurance quotes, you need to do two things.
First, make sure your expectations are reasonable. Consider a higher deductible health plan with a Health Savings Account to keep your premiums reasonable, get possible tax deductions, and build savings that you can use for all sorts of health care. Furthermore, if you do not use all of your money by Medicare time, you can take the money out to supplement retirement savings!
Second, be sure to compare health insurance quotes from different companies. Of course, prices vary by your age, health, and even where you live! But beyond that, different insurance companies have very different rate schedules. You will want to look at top health insurers with a variety of deductibles, and then find the coverage you can LIVE with, at a premium you can budget for!
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Understand Health Insurance
How To Understand What Your Health Insurance Covers
The Website: FamilyDoctor.org from the American Society of Family Physicians has put out a good article on understanding what health insurance covers. You health insurance policy is a contract between you and a health insurance company. It outlines what coverage you have, and under what circumstances you will be covered.
The first point the article makes, and one you need to understand is this: Keep in mind that a medical necessity is not the same as a medical benefit. Your doctor may decide that you need a medical procedure or medicine, and you insurance may not cover it. Most of the time your treatment should be covered by a major medical plan, within the limits of deductibles and copays, but sometimes it will not be.
If your health insurance claim is denied, you can certainly appeal the decision. The health insurer’s appeal process should be outlined in documents that came with your policy, or you should be able to obtain them with a phone call to customer service. Start with the health insurer first, and see if a mistake was made. Sometimes bills are miscoded, and can be changed at a very low level. If this doesn’t work, try an appeal.
As a last resort, consider your state insurance department or consulting an experienced health insurance lawyer for advice.
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