As unemployment rises, even fewer Americans will have health insurance through an employer. Rising medical costs are forcing small and large businesses to reduce coverage, increase co-pays and deductibles, and raise the amount that employees must pay each month. Some small business owners have even converted traditional health insurance plans to high deductible plans.

If your employer is offering you the choice between an HMO and PPO plan, how do you know which one to choose?

Both provide excellent care, but you may want to choose an HMO if its network of doctors and hospitals matches your needs. Health insurance with a Health Maintenance Organization (HMO) is generally less expensive. You’re required to select an HMO physician to be your primary health care provider. This doctor will coordinate all of your medical care, including referrals to specialists within your HMO network. If you seek treatment from a non-network physician, you will generally pay most of the cost yourself.

A Preferred Provider Organization (PPO) is more flexible than an HMO plan, but it still operates with a list of physicians and hospitals that are “within the PPO network.” You may visit an out-of-network provider, but you will pay the difference between the PPO network and out-of-network prices. Both plans usually offer a prescription drug benefit, as well. Some companies are offering options that allow you to combine features of both HMO and PPO plans.