Difference Between HMO and PPO

Hi InvestmentTotal admin, I would like to know the difference between HMO and PPO. I know HMO means Health Maintenance Organization and a PPO means Preferred Provider Organization. What I want to know is their functions in health care aspects, advantages and disadvantages and purposes. By the way, thank you for providing information in this blog about life and health insurance.I received this query last week, due to lot of works and obligations. I can’t find more time to answer the questions receives from InvestmentTotal readers. The one who sent this message have read my topics about how much life insurance would cost.

The sender already knew the meaning of PPOs as Preferred Provider Organizations and HMO means Health Maintenance Organization. Now, let me add some details about the functions of the two. Good thing I have lot of personal finance books to refer from. This time, I found the answers to this question related to HMO and PPO from the book of Debby Fowles entitled The 250 Personal Finance Questions for Your 20s & 30s. Here’s the answer!

Difference Between HMO and PPO

HMO is a group or association of health care experts (physicians, surgeons) and medical facilities (hospitals, clinics, health laboratories) that sell a package of health care services. Mostly, the health care services are available at a fixed price.

Preferred Provider Organizations (PPOs) combined the managed care aspects of an HMO with the flexibility of a fee-for-service plan.¹

Advantage of HMO and PPO

HMO	HMOs are lower and more predictable out-of-pocket costs and no claim forms.
PPO	Flexibility and wide choice of doctors and facilities.

Disadvantage of HMO and PPO

HMO	HMO services provided by health care professionals outside the network of your HMO aren’t covered.
PPO	More difficult to predict your out-of-pocket costs and you’ll pay more for your health care if you go out of network.

Source & References:
Debby Fowles, The 250 Personal Finance Questions for Your 20s & 30s. Adams Media, Avon Massachusetts, USA. 2008 page 121

There are many differences between HMO and PPO. I think this article is enough to answer the queries of the reader. Open your mind about the importance of life and health insurances. Awhile ago, I posted an article asking the investors if it is okay to invest without life insurance. Kindly read it and share your POV. Consider subscribing to InvestmentTotal via email to receive new updates and articles about health care industry.