Identify and define two health insurance plan types: HMOs and PPOs.

• A. HMOs require network restrictions and PCP referral; PPOs offer more provider flexibility and some out-of-network coverage with higher costs.
• B. HMOs offer more provider flexibility than PPOs.
• C. PPOs require PCP referrals for all visits.
• D. HMOs and PPOs are identical.

Answer: (A)

The key idea is how two common health plan types control where you can get care and how costs are shared.

HMOs typically require you to use a defined network and to have a primary care physician who coordinates your care. You usually need referrals to see specialists, and out-of-network coverage is limited or not available except in emergencies. Because of these restrictions, HMOs often have lower premiums and lower out-of-pocket costs.

PPOs offer more flexibility with a larger network and generally allow you to see specialists without a referral. They often provide some coverage for out-of-network care, but at higher costs (higher premiums or deductibles, and greater co-pays or coinsurance) than in-network care. This broader choice and out-of-network option come with the trade-off of higher overall costs.

So the description that HMOs have network restrictions and PCP referrals, while PPOs provide more provider flexibility and some out-of-network coverage with higher costs, best captures the typical differences. The other statements either flip those roles, claim PPOs require referrals, or say the plans are identical, which don’t fit how these plans actually work.