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Health Insurance Plan Types

A health plan is a general term for the benefits offered by a health insurer or an employer plan. Plan types include HMO, PPO and CDHP. Below, we review these types of health plans and define the difference between HMO and PPO. Plus, we cover the relationship between CDHPs and HSAs.

What Is an HMO

HMO stands for Health Maintenance Organization. It is a type of health plan meant to help you focus on controlling your health care costs while making sure you get quality care. With an HMO, your care is managed by a primary care physician (PCP) who can take care of many of your health care needs. In addition, HMOs usually offer broader coverage and have lower monthly premiums. Plus, out-of-pocket costs are more predictable than other types of plans.

When comparing PPO versus HMO, it's important to note that, unlike PPOs, HMOs only cover in-network health care services. This means that you may be responsible for the cost of your care if you visit a doctor or hospital outside of your network. In addition, some HMOs may have a smaller provider network and lower monthly premium than other HMOs.

How to Use Your HMO

  • See your primary care physician (PCP) first. Unless there is an emergency, your PCP should be your first stop when receiving health care. For women, a PCP can be an obstetrician/gynecologist (OB/GYN).
  • Get a referral. If you need to see a specialist, you must first get a referral from your PCP. This is another difference between HMO and PPO plans. When getting a referral, make sure the specialist is in your network. You do not need a referral from your PCP to see your in-network Woman's Principal Health Care Provider (WPHCP).
  • Stay in network. Except in emergencies, HMO plans only cover the cost of care given by doctors and hospitals in your provider network. If you visit a doctor or a hospital that is not in your network, you may be responsible for the entire cost of your care. To avoid these costs, check Provider Finder®  to ensure that you receive services in your plan's network.
  • Know where to go.Whether you're experiencing an emergency or scheduling an annual exam, where you go for care matters. Before you see a doctor, make sure you know how your plan works, what's covered and where to go. It may save you time and money. Learn more.

About Your Primary Care Physician (PCP)

Another difference between HMO and PPO is the primary care physician (PCP). When you first sign up for an HMO, you choose or are assigned a PCP and a medical group/independent practice association (MG/IPA).

A PCP is a doctor or medical professional who treats and coordinates your health care needs. PCPs typically focus on general practice, internal medicine and family practice. Women and girls may choose an OB/GYN or a WPHCP for their PCP. A pediatrician can serve as your child's PCP. You and your family members do not need to select the same PCP.

If you are new to an HMO plan, get started by following these guidelines:

  • Find your PCP or your medical group on the front of your Blue Cross and Blue Shield of Illinois (BCBSIL) member ID card or by logging in to Blue Access for MembersSM, our secure member website.
  • If you're a new patient, see your PCP as soon as possible. When you make your first appointment, let the doctor's office know that you're a new patient. Going as soon as you can will help avoid delays later when you are sick or need a referral.
  • Change your PCP or medical group/IPA at any time, except if you are hospitalized or in the 2nd or 3rd trimester of pregnancy.
    • To change doctors within the same medical group: Use Provider Finder to find doctors in your medical group. Then, call the medical group (MG/IPA) on your BCBSIL ID card and ask to change doctors.
    • To change to a different medical group:
      • Online
        • Log in to Blue Access for Members
        • Click on the Doctors & Hospitals tab
        • Choose the Change MG link
        • Follow the instructions
      • Phone
        Call the Customer Service number on the back of your BCBSIL member ID card.
What is hmo insurance?

What Is a PPO

PPO stands for Participating Provider Option and is a type of health plan that typically gives you the most flexibility. Compared to an HMO, a PPO usually has higher monthly premiums and lower out-of-pocket costs, like deductibles and coinsurance. Like HMOs, a PPO uses a certain group of doctors, specialists and hospitals, called a provider network. However, the difference between HMO and PPO is that a PPO can cover services from out-of-network doctors and hospitals, but at a higher cost to you. Some lower-cost PPOs have smaller provider networks than other more costly PPOs and some HMOs.

How to Use Your PPO

  • You don't need a primary care physician (PCP) or a referral to see a specialist.
  • Compare and manage your costs by using Provider Finder  to find in-network doctors, specialists and hospitals. Although you can get care from providers outside your plan's network, your out-of-pocket costs are greater when you receive out-of-network care.
  • Learn about pre-authorization (pre-notification). You may need to get pre-authorized by BCBSIL before you get certain tests or services. You or your doctor must call the pre-authorization number on the back of your BCBSIL member ID card to confirm.
  • Know where to go. Whether you need immediate care or are scheduling an annual exam, where you go for care matters. Before you see a doctor or go to a hospital, make sure you know how your plan works, what's covered and where to go. It may save you time and money. Learn more.
  • In an emergency — When your injury or illness is serious or life-threatening go to the nearest emergency room , even when traveling out-of-state or abroad. You won't have to pay the higher out-of-network deductible and coinsurance.
What is ppo insurance?

CDHPs and the HSA Option

If you choose to enroll in a Consumer Directed Health Plan (CDHP), you often have the choice to pair a high deductible PPO plan with a tax-advantaged account, such as a Health Savings Account (HSA). An HSA is a savings account that you can use to pay for a wide range of qualified medical costs, including dental and vision.

Things to Know About CDHPs

  • In order to open an HSA account, you must have an HSA-qualified, high deductible health plan.
  • CDHP premiums are often lower than other types of insurance coverage, such as PPO or HMO.
  • Most CDHPs use a PPO network. In these cases, you don't have to choose a primary care physician (PCP).
  • Like PPOs, with a CDHP, you can get care from in-network and out-of-network doctors, hospitals and specialists. Remember that you'll pay more for out-of-network providers.
  • Compare and manage your costs by using Provider Finder  to find in-network doctors, specialists and hospitals.

Health Savings Account (HSA)

A Health Savings Account (HSA) is a tax-advantaged account that you own and can use to pay for qualified medical expenses, including dental and vision services.

Things to Know About HSAs

  • Pre-tax contributions*: If you are eligible for an HSA, you – and your employer – can make tax-free contributions (up to the annual limit) to your HSA.
  • Tax-free growth: Any investment you or your employer make or interest earned are tax-free.
  • Tax-free withdrawals: As long as you are paying for a qualified medical expense, withdrawals from your HSA are tax-free .
  • Portability: You take your HSA account with you, even if you change jobs or health plans.
  • No "Use It or Lose It": Your HSA funds roll over annually, regardless of the amount.

Learn the difference between an HSA and an FSA (Flexible Spending Account).

* Health Savings Accounts (HSA) have tax and legal ramifications. Blue Cross and Blue Shield of Illinois does not provide legal or tax advice, and nothing herein should be construed as legal or tax advice. These materials, and any tax-related statements in them, are not intended or written to be used, and cannot be used or relied on, for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the promotion or marketing of the transaction(s) or matter(s) addressed by these materials. You should seek advice based on your particular circumstances from an independent tax advisor regarding the tax consequences of specific health insurance plans or products.