What Is the Difference Between HMO, PPO and HSA?


If you are in the process of shopping for health insurance, then you might be wondering what is an HMO, PPO and HSA? Those are the acronyms that stand for Health Maintenance Organization, Proffered Provider Organization and Health Savings Account respectively. You do not need to know what they stand for as much as what they do. One way to look at those acronyms is to think of them as the insurance types. Most of the health insurance plans will fit in one of those categories. To find out which one might work best for you, you will have to consider your past use of health care.

With an HMO you must choose a primary care physician and must get referral from your PCP (Primary Care Physician) to see a specialist. If for some reason you want to change your PCP then you need to notify the insurance company. Your change must be processed before you can see new PCP. Your PCP will coordinate your heath care needs. With HMO health plans you can not go outside your network without it is an emergency. In general HMO premiums tend to be higher but when you use medical services your out of pocket cost are lower. Some HMO insurance companies organize all the medical services in one facility. You can go to one place to see your doctor, get a lab work and get prescriptions. HMO plans are great for young families and anyone who is a frequent user of medical services.

With PPO health plans you have a choice of choosing your own doctors and hospitals, you do not need a referral to see a specialist. PPO type of health plans utilizes a network of doctors and hospitals, you can go outside the network but your costs may be higher. There is a lot more choice in coverage and monthly premiums when it comes to PPO plans tend to be lower than HMO plan premiums. Health insurance companies that offer PPO plans have a lot of options when it comes to deductibles and what plan covers. This makes it a popular choice since PPO plans tend to have a higher deductible making them more affordable. These are great health plans for anyone who is interested in flexibility and affordability. Although PPO plan may be more affordable you may be paying more for medical services.

Our last type of health insurance is HSA. These health plans became popular only recently with the constant rise of health care. The way HSA was designed to work is by combining high deductible PPO plan with Savings Account. It is a high deductible PPO health plans that is qualified to be HSA. For a PPO plan to be qualified as HSA compatible it has to comply with Federal Insurance Commissioners guidelines. The purpose of HSA qualified health insurance is to lower monthly premium and have additional tax deductions for your medical expenses. Since HSA qualified health plans have higher deductible than any other type of health insurance, they tend to also have a lower monthly premium. The basic concept is that you are willing to self insure yourself up to the deductible and once the deductible is met the insurance will start to cover your medical bills. The Health Savings Account portion of the plan is designed for you to put money in to. Every dollar that you put in to that account is 100% tax free. You never pay taxes on that money. There is a limit on how much money you can put in to HSA account and it changes every year. This is absolutely great option for Self-Employed and someone who rarely uses medical services.


Source by Dennis Alexander

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