Alright, I’ve let this slide far too long… It’s time to choose our health insurance plan. And when I say that it’s time, I really mean it… The paperwork is due tomorrow. My new employer offers three options when it comes to health insurance: (1) a traditional indemnity plan, (2) a Preferred Provider Organization (PPO) plan, and (3) a Health Maintenance Organization (HMO) plan. We’ve already ruled out the indemnity plan, as the premiums are high, and the coverage is overkill. So that leaves us with the PPO and HMO options. While they’re both administered through Blue Cross/Blue Shield, there are a number of differences. In very general terms, the PPO is more flexible than the HMO, but it’s also more expensive. Here’s a more detailed rundown of the key differences:
The PPO is $50 more per month (for a family) than the HMO.
The basic copayment for an office visit under the PPO is $20 vs. $15 for the HMO.
The PPO is kind of complex in this regard. There’s a basic $300 deductible per person ($900 for the family overall) for in-network, in-state care. If you’re travelling out-of-state, but visit an in-network doctor, a separate $300/$900 deductible applies. After that, we’d pay 10% of medical costs in-state and 20% out-of-state but in-network. Finally, if you go out-of-network, there’s a $400/$1200 annual deductible. On top of this, we’d be responsible for 40% of the usual, customary, and reasonable (UCR) charges, plus we’d be subject to “balance billing” (i.e., we’d have to pay the amount above the UCR costs, which is normally written off by in-network doctors). The HMO covers 100% of everything beyond the initial $15 copay (i.e., there’s no deductible, but see “Flexibility, ” below).
The HMO requires us to name a primary care physician (PCP) for each person in our family, and all car has to be coordinated through the PCR (e.g., you need a referral to see a specialist). Also, the HMO network is completely in-state. Thus, if we’re travelling and need to see a doctor, we’re S.O.L. That being said, we’d still be covered for life-threatening emergencies at the in-network level no matter where we are. On the other hand, the PPO doesn’t require referrals to see specialists, and they have an out-of-state network (although it’s more restrictive).
Pretty much the same coverage between the two… $10 copay for generic drugs, $25 copay for most others. Both plans maintain a formulary/preferred list, and coverage for certain drugs not on this list is not as good. But they both claim that their lists only exclude redundant drugs (i.e., those that do the same thing as something already on the list). The only difference is that the prescriptions have to be written by in-network doctors, and that’s impossible if you’re out-of-state on the HMO (unless it’s a life-threatening emergency).
Advantage: PPO (by a hair, although this really ties back to flexibility).
The HMO has a maximum lifetime limit of $2, 000, 000. I couldn’t find an equivalent number in the PPO literature, but I’m not particularly concerned about the HMO limit. I know, I know… Famous last words, but… We can always switch plans from one year to the next, so we can easily circumvent this limit (heaven forbid we ever need to) so long as we don’t rack up millions in medical bills in a single year.
We live in a relatively small town, and are therefore concerned about the availability of specialists, especially for our kids. About an hour from us there are several major research hospitals, each of which includes a dedicated children’s hospital. As it turns out, these are all covered by both the PPO and the HMO.
While there are a number of other relatively minor differences, they’re really not worth mentioning. So… Just tallying up the numbers, the HMO comes out way ahead. Then again, it’s probably not fair to weigh everything here equally. For example, the complete lack of ‘regular’ coverage when we’re out-of-state is a bummer for the HMO. Then again, we’d save $600 on the premiums alone, plus additional money on copays and deductibles, if we went with the HMO, so we could easily self-insure against a few routine medical visits on the road. And if anything especially nasty cropped up, we’d still be covered.
Right now we’re leaning toward the HMO. The good thing is that open enrollment is only two months away, so we can easily change our mind with an effective date of January 1, 2007. Given the above information, what would you do?