Choosing a health insurance plan can be confusing because the details that separate different plans can be easy to overlook. One plan might look like a great deal, only to leave you with limited pharmacy benefits, or a super small selection of doctors, hospitals and specialists.

Here’s a quick run-through to get you up to speed!


(Preferred Provider Organization)


PPO plans offer you the greatest flexibility of any health plan. Here’s how they work: As a PPO plan-holder, you typically have access to both “in-network” providers (doctors, hospitals, specialists, etc…), and “out-of-network” providers.

When you stay with in-network providers, you’ll experience the lowest cost for your services. However, if you’d like to visit a certain doctor, hospital or specialist, not included in your plan’s network, you can. Just know this: Going out of network is going to cost you more – Typically a lot more… And you’ll probably encounter a completely separate deductible and out of pocket maximum for these services, regardless of how much money you’ve spent that year for in-network services. (more on deductibles, out of pocket maximums, and coinsurance here)

  • Freedom of choice
  • Top doctors, hospitals and specialists in your area are likely to participate with the top PPOs
  • Even if a doctor is not in your network, you can still see them (for a higher cost)
  • High monthly premium compared with other plans
  • Figuring out if a doctor, hospital or specialist accepts your plan (in and out-of-network) can be confusing at times
  • Pre-authorization still required for some tests, treatments, and medications
Who are they good for?

PPO plans are a good option for people who value freedom of choice. If you want to make sure you have as many options as possible, should you need them, (and don’t mind paying for this privilege), a PPO plan could be the perfect fit for you.


(Health Maintenance Organization)


HMO’s are value-oriented health plans, and typically feature lower deductibles and copays than a similar PPO. This is because the HMO model is designed to curb costs. Unlike PPO plans, which allow you to go anywhere within the network, at any time, HMO’s are a bit different: When you first sign up for an HMO plan, you will be assigned to a Primary Care Physician or “PCP”. This PCP is your “gateway” for any medical needs you experience, and will always be your first step towards getting the care you need.

Quick example:

Jane has pain in her foot. If she has a PPO plan, she’ll simply call up a podiatrist, verify they’re in her network (to make sure she’s getting the best price through the health plan), and book an appointment to be seen.

If she has an HMO, her first appointment will need to be with her primary care physician. This visit will involve the primary care physician evaluating Jane’s problem, then making a decision on whether or not to refer her to a specialist (podiatrist, in this case). In the event that Jane is referred to a specialist, they will be a designated specialist within the HMO that Jane is in. Jane cannot choose the podiatrist, as with the PPO example.

  • Lower cost
  • You must visit your PCP first, before being referred to a specialist
  • Longer wait times
  • Shorter visit times
  • HMO network is much smaller than PPO network
Who are they good for?

HMOs are a good option if you’re looking to save money, but aren’t healthy enough to consider going the HSA-route. HMO’s are also a good option if you’re not afraid to speak up and be “your own best advocate”. This is an interesting factor to keep in mind, as your primary care physician may not always want to refer you to a specialist right away… If you don’t mind being proactive, and knowing what you want, it is very possible to get what you want – As long as you’re comfortable asking for it when necessary.

Special note: Kaiser Permanente, California’s largest and highest rated HMO doesn’t follow all the rules we’ve outlined here. Kaiser offers certain advantages, outlined here.


(Health Savings Account)


HSA plans (also referred to as “high-deductible health plans”, or HDHP’s) are really just PPO plans. However, with an HSA-compatible plan,  you’ll qualify for the opportunity to open a Health Savings Account, or HSA at a participating bank or credit union.

HSA plans feature higher deductibles, and typically don’t cover any of your medical expenses prior to deductible. (One exception is your once-yearly covered wellness visit, now mandatory under the Affordable Care Act).

Although there are certain drawbacks to this plan structure, opening a Health Savings Account, and contributing to it, can result in some excellent tax savings at the year’s end. < READ MORE ABOUT THE IN’S AND OUTS OF HSA’S HERE >

  • Tax savings
  • Freedom of choice
  • More personal accountability for use of plan
  • Lowest cost PPO-type plan (most of the time)
  • Visits prior to reaching your deductible are all coming out of your pocket (HSA’s don’t offer copays for doctors visits, labs, etc… in most cases)
  • Medication not covered until you reach your deductible (in most cases)
Who are they good for?

HSAs are a great option if two of the following three things apply to you:

  1. Young
  2. Healthy (few doctor/hospital visits per year)
  3. High income (high tax-bracket household)

If you aren’t afraid of managing the details associated with an HSA plan/account, this could be an excellent route to take.

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