Translating Complicated Health-Care Terms

Oct. 23 -- Most people don't know the meaning of health-care terms such as HMO and PPO, let alone the difference between the two.

Fewer than 36 percent of Americans are familiar with their health plans, according to an ABCNEWS/Washington Post poll.

If you have the choice between these two options, HMO or PPO, how do you decide?

One way you should not decide is the cost of the plan. One of the leading causes of bankruptcy is unpaid medical bills. That means if you just choose the cheaper plan, it could cost you a lot more in the long run.

For the more than 60 percent of the population covered by employer-based health insurance, it is important to understand the types of health care plans your employer offers as well as the underlying benefits.

HMO vs. PPO

You may have heard of HMOs and PPOs, but it is important to understand the difference if your employer offers you a choice between the two. PPO stands for preferred provider organization. It is a network-based, managed-care plan that allows participants to choose any health-care provider, whether they are a specialist (e.g., dermatologist, obstetrician, etc.) or generalist. If you choose to see a "preferred" provider, meaning they are part of your insurer's network, generally a larger amount of the cost will be covered by your health-care plan.

On the other hand, an HMO, which stands for health maintenance organization, arranges a wide spectrum of health care services that usually include hospital care, physicians' services and other types of health care with an emphasis on preventive care such as checkups, immunizations and screenings for diseases such as breast and prostate cancer.

Although typically less expensive than a PPO, an HMO plan tends to be more restrictive about which doctors you can see and when you can see them. More importantly, if you use doctors outside of the HMO network, you have to pay the cost out of your own pocket.