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Health Benefits: PPO versus HMO

I’ve procrastinated long enough in analyzing my health plan options and it basically comes to an Aetna Preferred Provider Organization (PPO) or a traditional Health Maintenance Organization (HMO). The basic difference between a PPO and an HMO comes down to something they simplistically call “choice.” With a PPO, you can see specialists without getting a referral from your primary care physician (PCP). With an HMO, you will first need to see your primary care physician and get a referral before you can see a specialists. The cost difference for this “freedom” would cost me $39.07 pre-tax per month (Aetna PPO $102.27, BlueChoice HMO $63.20). There are a handful of other options but essentially the decision for me came down to those two options.

I wish my employer offered a plan my former employer did, called Lumenos, which worked very simply: You saw whoever you wanted and it was paid for by the funds you had in this plan. Each year, you received $1,500 in your account and you paid for services with this fund. Whatever funds you didn’t spend in that year would be carried over to the next year. If you exceeded your account’s funds, you paid 10% out of pocket up to a cap – which I believe was $3000. Above that and it worked like a regular PPO. What that means is if you spend nothing in Year 1, you had no 10% zone (because two years would put $3000 into your account) and you immediately went into the regular PPO-style. All that cost me a mere $11 per month!