Health care costs are growing at a rapidly scary rate in fact according to research from peter g peterson foundation health care costs are projected to go up by 5.5 annually in the 10-year period between 2017 and 2027 from 3.5 trillion dollars to 6.
Trillion dollars that's a lot of money so if you're not getting more than a 5.5 salary increase every year that essentially means for every dollar you earn you'll be spending more and more of that dollar on medical care and services and that's why choosing the right health insurance plan from your employer is so.
Important you want to stretch your health dollars in fact all your dollars out as far as possible and that's what we're here to help you do today to explain ppos epos hmos and which health insurance plan might give you the most bang for the buck given your financial and health circumstances.
For our loyal subscribers and viewers welcome back we love you guys and for those of you new to diamond nest egg welcome to the number one place to learn about money insurance and retirement i'm jennifer first generation american i've spent most of my life in finance started working at banks like jp morgan and goldman sachs the age of 17 and.
Graduated top of my class from nyu and harvard business school and now i work on all things personal finance with young professionals and employees at places like bloomberg wework and marsha mclennan so ppos epos and hmos they're among the most common health insurance plans offered by employers out there.
Ppo stands for preferred provider organization epo stands for exclusive provider organization and hmo stands for health maintenance organization you usually choose or change your health insurance plan during open enrollment typically november of each year or during qualifying life events such as marriage birth of a child divorce or.
When you're too old to qualify for your parents health insurance which generally happens when you turn 26 so let's jump to the chase the ppo is the most expensive the hmo the least expensive and the epo somewhere in between the two when it comes to cost great we're done then right if only it were that easy.
Cost is of course one major factor when choosing your health insurance plan for the coming year but there are some other very very important questions you should ask yourself before you tick the hmo box just because it's the cheapest one when it comes to health insurance plans you're basically trying to balance out costs versus choice.
While ppos are the most expensive they also give you the most choice amongst the three plans choice flexibility in this case means the ability to see the doctor that you want when you want where you want similarly while hmos are the least expensive they also give you the least choice they're the least flexible.
Relative to a ppo and an epo and epos they're somewhere in between the two that middle ground not as expensive but also not as much choice not as much flexibility as a ppo but more expensive and more choice more flexibility than an hmo so choice flexibility is what we're going to dive.
Into now to help you figure out whether a ppo is the way to go for you or whether an epo or an hmo might be more suitable so when it comes to choice when it comes to flexibility there are three main areas in which a ppo epo and hmo differ difference one the need for a primary care physician or pcp your primary care.
Physician your pcp as a name suggests is the first doctor you go to with any medical concerns you might have whether that's a cold a rash back pain or anything else for that matter with a ppo you don't need to have a primary care physician you can if you want but it's not required whereas with an hmo it is required and.
Again an epo is somewhere in between the two most epos will require pcp but some won't if you're considering an epo call the epo beforehand to see if a pcp is required difference two when it comes to flexibility between an epo ppo and hmo is the out of network coverage with.
Every ppo epo and hmo there are in-network providers and out out-of-network providers in-network providers including doctors specialists and hospitals have contracted with the ppo epo or hmo to provide services for specific agreed upon fee with a ppo you're free to see whichever.
Doctor you want whenever you want wherever you want that's why the ppo wins hands down versus the epo and hmo when it comes to choice just keep in mind that seeing an in-network ppo doctor will cost you less than seeing someone out of network often significantly less.
So for example with an in-network doctor your ppo plan might pay 75 and you would pay 25 and with an out of network doctor your ppo plan might only pay 50 and you would have to pay the other 50 with an ep on hmo you don't really have a choice you have to see in network doctors.
If you see someone out of network the plan pays nothing you'd be responsible for a hundred percent of the cost the one exception is emergencies in this case an epo and an hmo would cover the cost even if it's out of network but and there's always a but be sure to check with your epo or hmo first because what you consider an emergency might not be.
An emergency for your epo or hmo guys if choosing the right health plan getting your finances in order is turning out to be more difficult than you expected drop us a note at jennifer diamondnestic.com to see if we can help simplify your financial house moving on to difference 3 when it comes to flexibility between a ppo epo and hmo.
And that's the referral requirement so say that you wake up one morning with a massive eye infection unsightly tears rolling out of your eye not that this has happened recently but we'll save that for another video another time with an hmo you'd have to go see your primary care physician first your pcp and it'd be up to your pcp to refer you onwards.
To an eye specialist this is known as the hmo referral requirement with a ppo and an epo you wouldn't need a referral it's not a cumbersome two-step process like with an hmo you can just pick your eye doctor choice and go see him or her directly do keep in mind that with a ppo an in-network eye doctor will cost you less.
Than out of network and with an epo you must stay in network or it won't be covered at all unless it's an emergency as defined by your epo in fact even though the epo generally costs more than an hmo one of the main reasons people choose an epo over an hmo is precisely so that they can go see a specialist without a referral from their.
Primary care physician now that you know the trade-offs between cost and choice when it comes to the different health plans here's how you can go about choosing which one might be most suitable for you a ppo may be the best option for you if you want choice and flexibility when it comes to your doctors and you're okay.
With paying more in monthly premiums annual deductibles and out of pocket costs you may also be more inclined to choose a ppo if you fall into one of these two buckets one you have a specific doctor or group of doctors whom you want to keep seeing perhaps because you've been with them.
Forever and don't want to switch ideally they're in network but even if they're out of network the ppo plan will still reimburse you a portion of the cost unlike an hmo or epo which would reimburse you zero and two if you travel often for work or pleasure ppos usually have a wider network of.
Medical providers across the country on the other hand if cost is your primary concern and you don't mind having a primary care physician one gatekeeper doctor who coordinates your medical care and refers you to all the specialists you might need then an hmo might be the better way to go for you.
And hmo also makes quite a bit of sense for you if you are young or in pretty good health and don't go visit the doctor often and here's a bonus if you are indeed young relatively healthy have no dependence and some savings you might want to consider a completely.
Different health plan altogether that we haven't talked about here the high deductible health plan or hdhp which can be combined with a health savings account and hsa so that you can save even more money to put towards healthcare now and in the future check out our health insurance playlist here for more hmos ppos hps and hsas.
Or our top rated playlist here on all things life insurance if you're interested in taking the next step in protecting your loved ones and building generational wealth now if you find that a ppo is too expensive and that an hmo is too restrictive then give some serious thought to an epo if your bank account.
Allows it an epo will be more expensive than an hmo but it gives you the option to go see specialists as you wish without having to visit your primary care physician guys money health insurance life insurance your finances everyone's financial journey is different what's.
Right for me or our clients may not be right for you if you want to make managing your finances a bit less complicated and pick up speed on your financial journey shoot us an email at jennifer diamondstick.com we hope you learned something new today and enjoyed this video if you did please don't forget to give that thumbs up and.
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