Kaiser HMO vs. HDHP: Key Differences Between Plan Types

When selecting health insurance, two common options are HMO and HDHP plans. But what exactly is the difference between a Kaiser HMO and HDHP? Below we’ll explore how these plans compare on costs, provider choice, and other factors.

HMO Overview

HMO stands for “Health Maintenance Organization”. Kaiser Permanente is well-known for its HMO plans. Here are some key things to know:

• You must choose a primary care physician (PCP) within the HMO’s network who coordinates your care. Referrals are required to see specialists.

• Except for emergencies, care is only covered if you see in-network providers. Seeing out-of-network doctors will result in high out-of-pocket costs.

• Premiums, deductibles, and copays tend to be low. For example, a Kaiser HMO may have a deductible of only $250 or $500.

• Kaiser HMOs have no deductible for office visits and only small copays like $20. You pay set copays for prescriptions and procedures.

• Monthly premiums are higher than HDHPs, but you have low out-of-pocket costs at time of care.

HMOs emphasize preventive care and coordinated treatment through your PCP, allowing you to manage costs. But provider choice is limited.

HDHP Overview

HDHP stands for “High Deductible Health Plan”. These plans can be HMO or PPO. Here are some traits of HDHPs:

• The annual deductible is at least $1,400 for an individual or $2,800 for a family in 2021 and 2022. Deductibles can go up to $7,000/$14,000.

• You pay 100% of medical costs out-of-pocket until meeting the deductible. The plan only pays for preventive services like annual checkups before the deductible.

• Total out-of-pocket costs are capped annually. The 2021/2022 limits are $7,000/$14,000.

• Monthly premiums are lower than traditional plans. But you have higher costs when receiving medical services.

• Enables you to contribute to a Health Savings Account (HSA) to pay healthcare expenses tax-free.

HDHPs have low premiums but shift more costs to patients at time of care. HSAs help offset the burden of high deductibles.

How Kaiser HMO and HDHP Plans Differ

Now that we’ve looked at HMO and HDHP plans generally, let’s specifically compare Kaiser’s offerings:

Provider Choice

• HMO: Very limited to Kaiser facilities and doctors only, except emergencies. Must have a Kaiser PCP.

• HDHP: Broader provider choice depending on plan type. Can be Kaiser-only HMO or use out-of-network doctors with PPO.

Cost of Premiums

• HMO: Higher monthly premiums.

• HDHP: Lower monthly premiums.

Out-of-Pocket Costs

• HMO: Very low cost per visit or prescription. Copays like $20 for office visits.

• HDHP: You pay 100% until meeting deductible. Higher cost when receiving care.

Choice of Doctors

• HMO: Must choose a PCP from limited HMO network. Referrals required for specialists.

• HDHP: No required PCP. Open access to network specialists.

Health Savings Account Eligibility

• HMO: Not HSA-eligible.

• HDHP: Must be HSA-eligible plan to contribute to Health Savings Account.

Benefits Covered

• HMO: Comprehensive coverage with low cost-sharing.

• HDHP: Same comprehensive coverage but you pay more until hitting deductible.

Use of Out-of-Network Providers

• HMO: Not covered except emergencies. Very limited network.

• HDHP: PPO version allows you to use out-of-network providers but you pay more.

Plan Flexibility

• HMO: Only low deductible options. Copays cannot be adjusted.

• HDHP: Deductible and out-of-pocket maximum can be customized annually.

Pros and Cons of Kaiser HMO vs HDHP

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