Health Insurance

Question 14 • 26-27 Ignite Financial Literacy Personal Finance - EL3403

Which of the following statements best describes the difference between a health maintenance organization (HMO) and a preferred provider organization (PPO)?

Answer

An HMO is paid a monthly premium for ongoing services while a PPO collects no money until after services are rendered.

An HMO allows the insured individual to choose from a list of providers while a PPO assigns the insured individual the provider nearest his or her residence.

An HMO requires the insured individual to go to a provider within their organization while a PPO allows the insured individual the option to receive care from a non-preferred provider at a higher cost.

An HMO is usually paid for by the insured individual’s employer while a PPO usually requires the insured individual to pay a co-pay or deductible for services.

Explanation

An HMO generally requires members to receive care through its network of providers, often coordinating care through a primary care provider. A PPO also has preferred network providers, but members can usually seek care outside the network and pay more. This matches choice c; the other statements incorrectly describe how provider choice or payment works.

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