Betcha didn’t know that according to the Kaiser Family Foundation, 63% of Medicare Beneficiaries on a MAPD plan in 2017 were on a HMO plan. I put most of my personal clients into PPO plans and I assumed most agents did too.
Only 26% of people were on local PPO plans and 7% were on regional PPO plans.
I grew up watching 20/20 and 60 MINUTES and they trash on HMO plans. Most HMOs required (not all do now) a referral from a primary care doctor (the gate keeper) before you had access to a specialist. This keeps costs down and often killed patients, hence the riveting TV shows.
Many plans require a referral–I try to steer away from them as I get more client complaints when this is a rule. Many HMOs don’t use a gatekeeper (but my gut tells me that almost all will eventually have a price gatekeeper, that time is coming.)
Your clients, like me, typically have a bad taste in their mouth about HMOs, but they are unlikely to be able to describe why they don’t like them. This is a simple discussion you should have with every client. If they purchase a PPO, chances are good that some time in the future they will move to a HMO, so lay the groundwork in your initial sale.
Both types of plans are good. But there are key differences that people ignore as they rush to purchase a HMO on price alone!
HMO’s have lower to no premium, lower co pays and lower out of pocket maximums. They are cheaper and sometimes, much less expensive, than PPO plans. BUT they have no out of network benefits.
If your clients say yes to any of the following questions, do not sell a HMO:
- Do you travel much?
- Do you have family members that live out of state?
- Do you have a lot of chronic conditions?
- If you got very ill, would you be willing to see doctors in your network, or would you want to be able to go to the best doctors in the nation for your care?
If your client says YES to any of the above, there is a chance that she will need care of out her network and it will be 100% out of her pocket on a HMO. Do I sell HMO plans? Yes. When the client doesn’t travel and all his kids live near or his kids travel here to visit him instead of vice versa. Or when her budget is so tight, that the HMO is really her only financial choice. Have I regretted selling a HMO plan? Yes. A client ended up buying a RV to travel the nation and he essentially left his coverage in his home state until I could move him the following AEP.
People find it easy to sell HMOs because there are no premiums. But my go-to is always a PPO if one is available. Insurance isn’t for what you have today, it is about that unknown health risk in the future. Cancer, amputation, bypass surgery and other expensive illnesses that you may want to go to the best specialist in the nation–and not be limited to the HMO network in your area. If I had a choice, I’d buy a PPO. But if my budget was very tight, I’d roll the dice, worry about the future later, and buy the HMO on price alone. And so do many Americans!