How Do I Choose Between HMO and PPO Insurance?

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PPOs offer greater flexibility than HMOs but can cost $58 more per month for single employer-sponsored coverage. Health Maintenance Organizations (HMOs) have restrictions surrounding where and how you get coverage that you do not see in Preferred Provider Organizations (PPOs) but their lower costs can offset these drawbacks.

Learn more about the differences between HMO versus PPO plans so you can make an informed decision about your health care.

Key Takeaways

  • In 2023, insured workers paid $683 on average for single coverage for an HMO plan and $742 for a PPO plan.
  • Unlike HMOs, PPOs don’t require you to elect a primary care physician or obtain a referral to see a specialist.
  • HMO networks are usually smaller than PPO networks.

What’s the Difference Between HMO and PPO Insurance?

We have created a table that offers a quick comparison between HMOs and PPOs.





Lower monthly premiums and out-of-pocket costs

Higher monthly premiums and out-of-pocket costs

Network Size



Out-of-Network Coverage

For emergencies only

Yes, but at a higher cost

Primary Care Physician Required?



Referrals Required for Specialists?



Will Claims Need To Be Filed?

Generally no for in-network care

Generally no for in-network care; Possibly yes for out-of-network care

What Is an HMO Insurance Plan?

An HMO insurance plan is a type of health insurance plan that provides coverage through a network of doctors, hospitals and other healthcare providers. HMO plans will require you to both choose a primary care physician (PCP) and obtain a referral from them when you need to see a specialist like a cardiologist or orthopedist.

When it comes to cost, HMOs are typically cheaper than PPOs, charging lower premiums and having lower out-of-pocket costs. However, their provider networks are usually smaller and outside of medical emergencies, your coverage is limited to only providers within that network.[1]

Why Should I Choose an HMO Plan Over a PPO Plan?

HMOs can be more attractive than PPOs due to their lower premiums and sometimes requiring a low or no deductible.[1] That said, your coverage will also be limited to only within your network and you will be required to obtain a referral from your primary care physician before seeing a specialist.



Lower premiums

Smaller provider network

Low or no deductible

Required to choose a PCP


Referral required to see a specialist


Out-of-network coverage for emergencies only

What Is a PPO Insurance Plan?

A PPO insurance plan is a type of health insurance plan that allows you to receive care from both in-network and out-of-network providers, although out-of-network care will cost more. Keep in mind that a separate deductible can apply for out-of-network services.[2]

Additionally, PPO plans typically do not require you to choose a primary care physician or obtain a referral to see a specialist. This can make them more convenient for people who want more control over their healthcare choices and who may need to see specialists frequently. For example, if you’re about to retire and are stuck between a Medicare PPO or HMO plan, you may want to choose a PPO plan if you’re regularly seeing a urologist, geriatrician and cardiologist.

Why Should I Choose a PPO Plan Over an HMO Plan?

The benefits of choosing a PPO plan include its flexibility, larger provider network and not requiring referrals for seeing specialists. However, these benefits will cost more via higher premiums and deductibles.



Larger provider network

Higher premiums

Not required to choose a PCP

Usually has a deductible

Referral not required to see specialist


Out-of-network coverage available


How Much Will I Pay for an HMO vs. a PPO?

In 2023, insured workers paid about $52 to $122 more per month for PPO coverage than for HMO coverage depending on whether they purchased single or family coverage. For HMO plans, the average monthly premium was about $684 for single coverage or $1,980 for family coverage. For PPO plans, the cost was higher at around $742 for single coverage and $2,102 for family coverage.[3]

Looking at Medicare Advantage plans with prescription drug coverage in 2023, individuals paid $15 monthly for an HMO plan, $17 per month for a local PPO plan and $46 per month for a regional PPO plan.[4]

Similarly, a dental PPO will cost more than a dental HMO. For example, in 2024, Blue Shield California may charge as little as $12.50 for a dental standard HMO plan but for a dental PPO plan, it can cost $39 or more.[5]

How Do I Choose Between an HMO or PPO?

Les Perlson, the managing general agent at National Plan Administrators (NPA), recommends HMOs for those who are generally healthy, do not see specialists often and are on a budget. “A case from a client at NPA involved a young individual who opted for an HMO, focusing on preventive care and routine check-ups, and [they] enjoyed the reduced costs without feeling limited in their healthcare options,” he told SmartFinancial in a message.

Meanwhile, a PPO plan is better suited for somebody with more involved healthcare needs despite the higher premiums. “The flexibility of not needing referrals and the ability to see out-of-network doctors without incurring immense out-of-pocket costs provided them a better quality of life and essential health services accessibility.” Perlson said, referencing another client case at NPA.

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What is the difference between HMO and EPO insurance?

Compared to HMO plans, EPO plans generally have lower out-of-pocket costs. In addition, EPOs may not always require you to elect a primary care physician and obtain a referral prior to seeing a specialist.[6][7]

What is a drawback to HMO insurance?

Drawbacks of HMO insurance include being required to elect a primary care physician and obtain a referral to see a specialist, typically having smaller provider networks and having zero out-of-network coverage outside of emergencies.

Which is better, HMOs or PPOs?

HMOs may be better if you want lower out-of-pocket costs and more coordinated care, while PPOs may be better if you want more flexibility and a broader provider network.

Do I need a primary care physician if I have a PPO?

You’re not required to have a primary care physician if you have a PPO plan. However, you may still consider having a PCP so you have a single person coordinating your care who can advocate for you and understand your medical needs.


  1. Medical Mutual. “HMO vs. PPO Insurance Plans.” Accessed May 7, 2024.
  2. Blue California. “Do You Have a Good Understanding of Your Current Plan?” Accessed May 7, 2024.
  3. Kaiser Family Foundation. “2023 Employer Health Benefits Survey.” Accessed May 7, 2024.
  4. Kaiser Family Foundation. “Medicare Advantage in 2023: Premiums, Out-of-Pocket Limits, Cost Sharing, Supplemental Benefits, Prior Authorization, and Star Ratings.” Accessed May 7, 2024.
  5. Blue Shield California. “Smile: We've Got Your Dental Plan.” Accessed May 7, 2024.
  6. Anthem. “How To Choose a Health Insurance Plan.” Accessed May 7, 2024.
  7. Cigna. “What Is the Difference Between an HMO, PPO, and PPO?” Accessed May 7, 2024.

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