Which insurance type typically results in lower premiums but higher out-of-pocket expenses for the patient?

The correct answer is the Health Maintenance Organization (HMO) model. HMOs typically offer lower premiums due to their structured network of providers and requirement for members to select a primary care physician (PCP). This network arrangement allows HMOs to negotiate lower costs with providers and streamline care, which contributes to the reduction in premium costs.

However, while premiums may be lower, patients often face higher out-of-pocket expenses when they seek care outside of the HMO’s network or if they need to see specialists without a referral from their PCP. HMOs emphasize cost containment and preventive care, which can result in more significant out-of-pocket costs for patients who need services that are not fully covered or require referrals.

In contrast, other options such as indemnity insurance, PPOs, and POS plans generally provide more flexibility in choosing healthcare providers and specialists without needing a referral, often leading to higher premiums but potentially lower out-of-pocket costs, especially in a more extensive network. This dynamic illustrates the trade-off between premium costs and out-of-pocket expenses across different insurance models.