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HMO? PPO?
6 Tips for Choosing the Best Type of Health Plan for Your Budget
3. Learn your ABCs.
There are four basic types of health insurance plans. In simple terms, this is what they are: - HMO: The health maintenance organization, or HMO, usually charges lower monthly premiums in exchange for making a restricted network of providers available. In most communities, the networks include many of the physicians and hospitals you might choose anyway. These plans also cover preventive care such as annual checkups. If you go outside the network, though, you won't be covered.
- PPO: The preferred provider network, or PPO, also uses a network approach to limit costs – but out-of-network expenses are covered, albeit at a lower rate. Premiums are slightly higher than with an HMO, and preventive care might not be covered.
- FFS: Fee-for-service (FFS) coverage refers to "old-fashioned" health insurance where the doctor bills for individual services and the health insurance pays for services it has specified, at a pre-determined rate. You might have to pay out of pocket and be reimbursed. Some services will be covered, and others not at all, depending on the contract.
- HSA/MSA: Health savings accounts (HSAs) or medical savings accounts (MSAs) are newer options that accompany high-deductible plans. Patients pay lower premiums in exchange for higher deductibles. What services are covered will depend on the plan, but members will pay more out of pocket up to a point. Members can, however, save pre-tax dollars in an HSA, from which they can pay medical bills as they arise – or save the money for later if it's not needed.
