PPO? HMO? MSA? POS? The world of health insurance can be as confusing as it is complicated. Its rapid growth in the past years affords each customer with more and more options, and a greater ability to pick the one that’s right for them and their family – if they can understand what is being offered.
The United States remains one of several countries that maintains a health care system that is not nationalized. This means that each individual is responsible for the costs of their own medical care. These bills can be very costly and often impossible to pay if attempted on an individual basis.
Luckily, our system provides for this through health insurance. This is how it works in a nutshell. Independent insurance companies collect a premium from those purchasing medical insurance. Each company puts this money into a fund and uses it to pay for medical care for the participants who need it (after claims are submitted to the insurance companies).
The confusion comes when trying to decide which plan is right for you. Here are some important basics about the different plans available.
- PPO - A PPO is a Preferred Provider Organization. As a member of a PPO, you can use the doctors and hospitals within a designated PPO network or go outside of the network for care. A referral is not needed to see a specialist. However, if you obtain care from a medical provider that is not included in the network, you will pay more. In other words the PPO will pay a lesser percentage of medical costs accrued outside of the network. These generally require payment of an annual deductible and may charge higher copayments than HMOs. PPOs normally offer more flexibility than HMOs, but costs tend to be higher.
- HMO - An HMO is a Health Maintenance Organization. HMOs allow you to select a primary care physician from a list of doctors in that HMO's network. Your primary care physician will be the first medical provider you call or see. He or she will make any needed referrals to a medical specialist. Typically, these specialists will be part of the HMO network. If you obtain care without first acquiring a referral from your primary care physician, you may have to pay the entire bill. Some exceptions are made for emergency care. Some HMOs don’t require you to pay any costs from visits with your primary care physician, while others do charge a small copayment. There is also generally no deductible associated with an HMO.
- MSA - An MSA is a Medical Savings Account. This account is a tax-advantaged personal savings account used with a high deductible health policy. Individuals contribute money to this account on a pre-tax basis to set it aside for qualified medical expenses.
- POS – A Point-of-Service Plan (POS) is a combination of HMO and PPO features. It allows you to decide whether to go to a network provider or an out-of-network provider with varying financial obligations.
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