There are a lot of acronyms floating around when it comes to health insurance, and they can make choosing the right plan a bit difficult if you don’t understand what they mean and how they can affect your insurance policy. Since the implementation of Obamacare, or the Affordable Care Act (ACA), choosing health insurance has become even more complex in some ways, although perhaps easier in others.
On the one hand, those seeking health insurance now have to sift through four different tiers of coverage (bronze, silver, gold, and platinum), all providing different coverage at different costs. On the upside, however, submitting an application to the healthcare marketplace makes it easy to compare plans available to you that suit your needs and match your price range.
Still, it behooves you to know what acronyms like HMO and PPO mean and how they affect you, especially since different tiers of healthcare may have both types of policies available. So what is PPO and is it your best option for health coverage?
What is PPO?
PPO stands for Preferred Provider Organization. Although this type of plan doesn’t tend to be the least expensive (HMOs are generally cheaper in terms of premiums and other out-of-pocket expenses), the good news is that members have some latitude to choose healthcare providers and facilities that HMOs don’t allow.
PPOs operate in much the same way as HMOs insomuch as they have a network of preferred healthcare providers and facilities. The major difference is that HMOs will only provide coverage if you utilize their network for services. If you go out of network with an HMO, you will often have to pay out-of-pocket for 100% of expenses incurred.
With a PPO, you will receive the best coverage by choosing doctors, hospitals, and pharmacies that are part of the approved network. However, you will not be denied coverage for seeking healthcare services outside the network. You may not receive the same level of coverage, but neither will you have to foot the bill completely.
With a PPO you will likely pay more for premiums and perhaps deductibles and copays than you would by choosing a comparable HMO, but you will receive additional benefits as a result of increased payments.
The biggest benefit of choosing a PPO is freedom – the freedom to choose any healthcare provider or facility while still receiving some coverage for services. Although you will receive the greatest financial benefits by seeing your selected primary care physician (PCP) and getting referrals to specialists in your network (like with an HMO), seeking services outside your network without a referral from your PCP will not result in denial of coverage.
PPO and Obamacare
There are many options to consider when you elect to purchase health insurance through the ACA healthcare marketplace. Not only will you have to choose from the four metal tiers of benefits available, but within those tiers you may also have choices between HMO and PPO plans.
Naturally, you’ll also have to choose the health insurance provider you prefer, as your state may feature plans from a wide variety of insurance companies participating in Obamacare. However, your decision will likely have more to do with the benefits provided and the associated cost.