Different Types of Health Insurance Plans

Choosing health insurance is never easy. Whether you are covered under an employer-sponsored benefit plan or shopping for individual coverage for yourself and your family, California residents need to be prepared with the right information before making this important decision.

Many employers in California offer employees the coverage choices of both a Health Maintenance Organization (HMO) and a Preferred Provider Organization (PPO). HMO plans keep medical costs down by encouraging members to use the services of only those healthcare providers under contract with the plan. Another way HMOs save money is by having each individual assigned to a “Primary Physician” who acts as the manager of the patient’s overall healthcare plan. If the person needs to see a specialist, they must obtain a referral from their primary physician first. If they neglect to do so, or if they see an out-of-network provider, their claim will be rejected.

For example, if you want to go to Dr. Smith for physical therapy, but Dr. Smith is not under contract with your HMO, you would have to pay for his services out of your own pocket.

An advantage of HMOs is that they usually address a variety of health needs, such as preventive care. HMOs are a good choice for people who value affordability and comprehensiveness in their health insurance plan, and are willing to select from a more limited pool of providers.

PPOs are also designed to keep costs down, but they offer more freedom of choice than an HMO. Patients are free to consult any doctor within the network without having to clear it through a primary physician. In fact, most PPOs don’t assigned primary physicians. Patients are also free to see doctors and visit hospitals that are not in the network, but they must pay a higher cost out of pocket should they opt to go this route.