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Open Access and Public Access are NOT the Same!
Originally, Public Access specifically refered to the NIH's requirement that peer-reviewed manuscripts based on NIH-funded research be made publicly available on the NIH's PubMed Central Website within 12 months of publication. Over time, Public Access has expanded to include any such mandate from government funding agencies. For more information see the "Other Funding Agencies" section of this guide.
Basically, Open Access is a publishing model that differs from the traditional publishing model. It is also something of a cause and a movement in the scientific community. See Peter Suber's Open Access Overview. OA is designed to eliminate both price and permission barriers to the use of published literature.
In the most basic terms for publishing articles:
Open Access has a number of advantages. Published scientific research is instantly available to everyone in the world with internet access, which speeds the sharing and dissemination of scientific knowledge. It provides access to those who could otherwise not afford to pay for the content, thus making vital knowledge freely accessible worldwide. This is of great value to everyone from researchers to the general public. There are also individual advantages to the author who keeps better rights to copy, use, distribute, and display their work and often gains a larger readership.
There are couple of problems with OA. The first is that the publishing fees can be quite high, even up to a few thousand dollars depending on the publisher. When writing a research grant, it is a good idea to include some funds for those fees in the budget if the funding agency allows. Secondly, there are a number of bad 'open access publishers' out there. If there is a way to make money, someone will attempt a scam. So do some preparation and use common sense when selecting an OA publisher. See Beall's List of possible predatory OA publishers.
The Bottom Line:
The NIH requires that any article based on its funding be submitted specifically, and solely, to PubMed Central through NIHMS. It doesn't matter if the article is published by the traditional method or by Open Access. It doesn't matter if the full-text of the article is available anywhere or everywhere else. For NIH Public Access, it must go into PMC. (As noted above, this isn't true of the DOE.)
However, for ANY article meeting public access requirements, you do NOT have pay for Open Access publishing. Many journal publishers will try to sell Open Access to you when you just want Public Access. Public Access means they only have 1 year to sell the content, so if they get you to pay for Open Access, they make more money. Don't pay for Open Access just to get Public Access. The journal has to allow you to submit to PubMed Central if the article is NIH-funded (or PAGES if DOE-funded), regardless. Only choose to go with the Open Access model if it is what you want to do for other reasons and as stated above, there are good reasons to choose Open Access.