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What the Hell is an HMO?

14 January 2020 1,030 views No Comment

For the bloke looking to save a buck on health insurance after graduation, there are plenty of plans to choose from. But where to begin? HMO, PPO, POS? These mean nothing to me (save POS, which isn’t what I originally thought it was).

The article “Nine Keys to Choosing the Right Health Plan” and the Blue Cross/Blue Shield Glossary do explain the more basic types of plans regarding health insurance, but in such dense clinical jargon that it’s tough to get one’s head around.

Well, we’re here to break it down even further, taking said clinical jargon and putting it into plain ol’ English.

  • HMO (Health-Maintenance Organizations) - Tend to be the least expensive, but also lack flexibility. You must choose a primary-care physician, and you must also get pre-authorizations for some medical procedures so you can see specialists. An HMO is a healthcare system that assumes or shares both the financial risks and the delivery risks associated with providing comprehensive medical services to a voluntarily enrolled population in a particular geographic area, usually in return for a fixed, prepaid fee.

In English:

HMOs are dirt cheap, but it’s like living at home with your parents again.

With an HMO, you’re assigned a Primary Care Physician (or PCP) who acts pretty much as a chaperone to all your medical needs. Without his or her referral, you’re not covered (except for a medical emergency). The thing that sucks about this is that all referrals must meet the HMO guidelines, a set of rules that is certain to be an impressive and monotonous read.

Still, if you’re looking to save the most money, and don’t mind being given the run around (though you might should you break your leg), maybe an HMO is for you.

  • PPO (Preferred-Provider Organizations) - PPOs give policyholders a financial incentive-in the form of reasonable co-payments-to stay within the group’s network of practitioners, although you can usually visit out-of-network specialists without pre-approval. A PPO is a healthcare benefit arrangement designed to supply services at a discounted cost by providing incentives for members to use designated healthcare providers (who contract with the PPO at a discount), but which also provides coverage for services rendered by healthcare providers who are not part of the PPO network.

In English:

It’s all about the discounts, baby.

Actually, it’s sort of like one of those clubs you join to get 50 CDs for $10. With a PPO, you have a selection from a group of pre-chosen providers, all of which are part of the organization. You can pretty much choose anyone within that network, so if your doctor falls into this category, or if you don’t care who your doctor is, perhaps a PPO is the way to go.

  • POS (Point-of-Service plans) - POS plans are more flexible than HMOs, but they also require you to select a primary-care physician. A POS plan is a healthcare option that allows members to choose at the time medical services are needed whether they will go to a provider within the plan’s network or seek medical care outside the network.

In English:

POS plans are basically the child of the HMO and the PPO. With POS, you’re still confined to a network similar to a PPO. However, the decision of where to go isn’t made until the services are needed, so there’s definitely a lot more freedom than one will find with an HMO.

POS plans are pretty well-balanced.

  • FFS (Fee-for-Service plans or payment systems) - A benefit payment system in which an insurer reimburses the group member or pays the provider directly for each covered medical expense after the expense has been incurred.

In English:

FFS plans typically consist of paying up front and getting reimbursed later. The good thing about having this sort of plan is its flexibility. Say there’s a specific doctor you wish to visit. A FFS plan will allow for this, but there’s also a chance that you’ll have a higher deductible or co-pay.

Basically, with FFS, you’re paying for freedom.

Of course, there are certainly variations within each category of plan. This is why it’s essential to read the fine print-no matter how bland it is-and come to an understanding of what you’re paying for before you sign the dotted line. Be sure to ask lots of questions when shopping for any kind of insurance, because it certainly pays off in the long run.

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