HMO and PPO Health Insurances - Which is Best for You

The Two Most Common Health Insurance Types Compared

Many large companies offer health insurance to their employees. Often you can change your coverage type once a year during a period of a month or two called open enrollment. The decision you make could cost you a fortune based on what happens to your health during the coming year. There are many employees who opt not to take health insurance at all due to the costly monthly fees that you will have to pay. Some companies cover 100% of the fees but most split the cost with the employee. Opting not to take health insurance is like playing Russian Roulette with your health.

Generally your company pays a portion of the insurance fee and you pay the balance. An 80%/20% split for active employees is not unusual. PPOs tend to be slightly less costly than HMOs but usually not by very much. Since there are many options that HMOs and PPOs offer, your payment may be higher or lower but expect about $200 to $300 a month to be deducted from your paycheck for single person coverage and $300 to $400 a month for family coverage. If you pay less than this, your company is either picking up a larger portion of the difference or they are using one of the lower cost and probably lower quality HMO's/PPOs. Retirees pay more in some companies. A $525 per month fee for two people is not unusual, in fact that is what I pay each month as a retiree. My Company picks up 2/3rds of the insurance fee premium for retirees. Some larger companies pay much more, especially if you were in a company and belonged to a strong union. However, many companies are dropping their coverage for retirees altogether because of the high costs involved.

What is an HMO?

HMOs were designed to catch and cure problems before they become big and expensive medical problems. Your costs are usually minimal for in-plan Physicians, medical tests and Hospital costs. Medications are cheaper because the HMO plan administrators can bargain with Pharmaceutical Companies to get medications at a much cheaper rate than any individual. Generics may be only $10 per prescription, but new name brands can cost as much as $45 per presciption.