HMO vs. PPO Insurance: Which Is Right for Me?

Various factors can impact whether you would benefit more from a health maintenance organization (HMO) or preferred provider organization (PPO) health insurance plan, such as your budget, your health care needs and how you obtain coverage. In general, HMOs provide more limited coverage at a lower cost, while PPOs offer broader coverage at a higher cost.

Read on for more HMO vs. PPO insurance comparisons to help you decide which type of health plan is right for you.

On This Page

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  What Is an HMO Insurance Plan?

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  What Is a PPO Insurance Plan?

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  HMO vs. PPO Plans: What Are the Differences?

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  HMO vs. PPO Plans: Which Will Cost Me More?

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  How To Choose Between an HMO Plan and a PPO Plan

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  FAQs

What Is an HMO Insurance Plan?

An HMO is a type of health insurance plan that regulates costs by exclusively covering treatments from providers that contract with the plan to deliver health care services at agreed-upon rates. HMO plans are extremely common on the Health Insurance Marketplace, with 84% of Marketplace enrollees in 2021 joining either an HMO or an exclusive provider organization (EPO).^[1]

However, HMO plans are less common among people with job-based coverage, accounting for only 13% of employer-sponsored health insurance plans in 2024.^[2]

How Do HMO Insurance Plans Work?

HMO health insurance plans exclude coverage for care received from providers outside your plan’s network — except in emergencies. As a result, you’ll pay 100% of the costs out of pocket if you visit an out-of-network hospital or doctor for routine care. Fortunately, in-network providers typically handle claims for you, so you generally won’t have to navigate the insurance claims process yourself.^[3]

By limiting coverage to a relatively small lineup of in-network providers, your HMO plan ensures you will be charged a predetermined amount for medical services, resulting in more predictable health care spending for both you and your insurer. This allows your insurance company to charge you lower premiums; you’ll also spend less on copays or coinsurance when you access care.^[3] Many HMO plans don’t even require you to meet an annual deductible.^[4]

Another limitation of HMO insurance is the requirement to select a primary care physician (PCP) to coordinate your medical treatments. Visits with a specialist aren't covered unless your PCP refers you.^[3] For example, if you begin to experience heart problems, you’ll need to meet with your family doctor before seeing a cardiologist.

What Are the Pros and Cons of an HMO Plan?

What Is a PPO Insurance Plan?

A PPO is a type of health insurance plan that offers more flexibility than an HMO — but at a higher cost. It’s the most common form of employer-sponsored group health insurance, covering 48% of people with job-based coverage in 2024.^[2] Conversely, PPOs made up only 13% of Marketplace health insurance plans sold in 2021.^[1]

How Do PPO Insurance Plans Work?

While PPO insurance plans have networks like HMOs, they don’t require you to exclusively visit in-network providers. That said, you’ll pay more out of pocket when you go out of network, and you may have to meet separate deductibles for in-network and out-of-network care.^[3] Still, PPO plans typically have broader provider networks, giving you a wide range of doctors and hospitals to choose from — while still saving money when you stay in network.^[4]

If you receive care from an out-of-network provider, you may need to pay up front and file your own claim for reimbursement.^[3]

PPO insurance also grants you more flexibility by allowing you to see a specialist without obtaining a referral — and your insurance company doesn’t require you to choose a PCP. Because of this added flexibility, PPO plans are typically more expensive than HMO plans in both premiums and out-of-pocket costs.^[3]

What Are the Pros and Cons of a PPO Plan?

HMO vs. PPO Plans: What Are the Differences?

For a clearer picture of the difference between HMO and PPO plans, see the following table for a summary of the major points discussed in the previous sections.

Medicare HMO and PPO Plans

Eligible Medicare members who buy a Medicare Advantage plan from a private insurer may also be able to choose between an HMO and a PPO. Like their traditional counterparts, Medicare HMO plans tend to be cheaper but come with more restrictive coverage, while Medicare PPO plans cost more but offer greater flexibility. The main difference is that many Medicare Advantage companies offer hybrid HMO-POS (point-of-service) plans, which may cover out-of-network care in certain situations.^[5]

HMO vs. PPO Plans: Which Will Cost Me More?

You can generally expect to pay more for a PPO health plan than for an HMO health plan. For example, employer-sponsored PPO coverage cost an average of $782 per month for individuals and $2,223 per month for families in 2024. In comparison, the average monthly premium for HMO coverage was $729 for individuals and $2,100 for families.^[6]

Similarly, Medicare Advantage members paid an average of $12 per month for HMOs, $16 per month for local PPOs and $55 per month for regional PPOs in 2024.^[7] Even dental insurance tends to cost more if you opt for PPO coverage. For example, HMO dental plans from Blue Shield of California start at $13.20 per month, while PPO plans start at $30.10 per month.^[8]

How To Choose Between an HMO Plan and a PPO Plan

Your budget and expected health care needs are the main factors you should take into account when deciding between an HMO and a PPO. If you only need health insurance to cover routine checkups and emergency medical bills, purchasing an HMO plan will likely be the most cost-effective way to secure coverage.

Conversely, if you have complex health care needs and are already seeing multiple specialists in different locations, you may appreciate the flexibility that a PPO provides, even if it means spending more money. A PPO can also be beneficial if you frequently travel around the United States and want to be able to freely receive medical care without worrying about whether any given provider is in your plan’s network.

If applicable, you should also pay attention to what type of plan you can purchase through work because your employer will likely cover the majority of your health insurance premium. As a result, it’s possible that you’ll pay a lower monthly premium for an employer-sponsored PPO than for a Marketplace HMO.