Choosing a health plan for you or your family may seem daunting: HMOs, PPOs, high deductible plans, different premium tiers, etc. Like everything else we buy, we want to find the best. However, this mindset may set you up for disappointment, frustration, or even worse, choosing the wrong plan for your situation. Why? Because with health insurance, there is usually no “one best plan.” Rather, there are different plan options, and people with different needs and preferences. So your goal should be to find the best plan for you.
Before you choose a health insurance plan, think through your own preferences and focus on one question:
What is most important to YOU in your health plan?
1) I want to stay with the same doctor.
If this is your biggest priority, you should call your doctor and ask which insurance plans they take. Be sure to ask about the specific type of plan, not just the insurance company’s name, because some doctors may for example, belong to an insurer’s PPO network, but not their HMO network. Most plans will give you a printed provider network or make one available online. However, these lists can change frequently, so it is best to check with your doctor for the most accurate information.
2) I want to be able to see any specialist I want.
These plans have become more and more rare, since most insurers have created provider networks, or lists of doctors who will be covered. Plans that have no physician networks are called Private Fee for Service (PFFS or just FFS). You do not need a primary care physician or a referral to see a specialist. However, these plans are rarely offered outside of Medicare today.
The next closest choice is a PPO. These plans offer better coverage when you see a physician within their network (usually around 80%) and less coverage when you see an out-of-network physician (usually around 50%). So you can still go to any doctor, but just expect to pay more out of network.
HMOs are the most strict about what they will cover. They will only cover services from providers in their network and require a referral from your primary care physician for you to see a specialist.
3) I don't like having to get a referral to see a specialist.
If this is important to you, a PPO will work better than an HMO. You do not need referrals, and if you stay with the plan’s provider network, you’ll be able to get the best coverage. The main drawback is that HMOs are generally much more affordable insurance than PPOs—lower premiums, co-pays, and coinsurance.
4) I am willing to pay more on the front end to avoid high costs on the back end.
Insurance is about risk—we pay a little bit in each month, so that it will repay us a bigger sum we need it. Some people prefer the security of knowing that anything that happens will be fully covered and are willing to pay a high premium for this. PPOs generally work better for this type.
5) I would rather pay low premiums now, even if it means I would have to pay more if I get sick.
In contrast to those in #4 above, some people would rather pay less each month, and gamble that they won’t need to use their health plan. For this crowd, a plan with lower premiums and either a high deductible or high co-insurance would be more appropriate. HMOs or high deductible plans (whether they are PPOs or HMOs) generally work better for this type.
So really, the plan you pick is really driven by your personal preference. Get clear on what is most important to you, and let these values guide your comparison of HMO vs PPO or high-deductible vs low-deductible. Most of the time, this is far more reliable than looking for the plan that is rated the best or that your trusted co-worker chose. Let go finding the best plan of all, just the find the best plan for your own needs.