How to Choose the Right Health Care Plan for You

Maybe it’s Open Enrollment time or maybe you’re starting a new job that offers health benefits. What’s the key behind all the terms–HMO, PPO, HDHP—and how can you tell how much that plan will really cost you?

The two most common terms, HMO and PPO, have to do with physician choice. A HDHP is about the deductibles. As a general rule, HMOs will offer greater savings than PPOs, but with the drawback of less choice and control. HDHPs can save you even more money if you are healthy and don’t get frequent medical care.

So which plan fits you?

People with an HMO

• Pay lower monthly premiums
• Have to go through a primary care physician for everything
• Have to get a referral for specialty care

People with a PPO

• Pay higher monthly premiums
• Can generally go directly to specialists
• Will usually pay more for specialty care when they do get it

People with a HDHP (High deductible health plan)

• Pay lower monthly premiums
• Have a high deductible—you’ll be responsible for at least $1,200 out-of-pocket before your plan pays anything
• You can open an HSA (health savings account) to save money specifically for health care costs with big tax advantages
• Are usually younger and healthier

Some things are consistent across HMOs and PPOs – both have to cover preventive care at no cost to you (and that’s even if it’s an HDHP, and you haven’t met the deductible yet!), emergency care at out-of-network hospitals at the same level of coverage as in-network hospitals and both have the same annual and lifetime out-of-pocket maximums.

Prescription coverage will vary by the plan.

If you’re overwhelmed about choosing the best plan for you, try focusing on two things: physician choice and how often you need health care.

Are willing to pay more to get easier access to specialty care when you want it? And are you willing to chance having to pay a higher deductible to have lower monthly premiums?

For many people, simplifying it to these two preferences will help lead you to the right plan.

Tomer Shoval is the CEO and Co-Founder of Simplee, a free online personal health care expense management tool. Connect with him on twitter, facebook or email.