HMOs, PPOs and HDHPs

Medical plans differ in how much you pay out of your paycheck versus how much you pay at the doctor and how much freedom you have in choosing a doctor.

Different types of medical plans vary in their monthly costs as well as their requirements for choosing specific doctors. An HMO, or Health Maintenance Organization, has a lower monthly premiums, but also provides a limited amount of doctors to choose from. You must designate a Primary Care Physician and receive a referral to see any other doctors or specialists. A PPO, or Preferred Provider Organization, has a higher monthly premium, but allows you greater freedom to choose your medical care provider. PPOs don’t require a primary care physician, so you can go directly to a specialist. An HDHP, or High Deductible Health Plan, offers the least expensive monthly premium, but requires you to pay all medical expenses up to a certain deductible amount. Like a PPO, HDHPs do not require a primary care physician. HDHPs are often attached to a Health Savings Account that allows you to set aside pre-tax dollars for out-of-pocket health expenses, which helps to cover the cost of a high deductible.