How Do I Choose Between HMO and PPO Insurance?

PPOs (preferred provider organization) typically have larger provider networks and don’t require specialist referrals but are often more expensive than HMOs. HMOs (health maintenance organization) may be a better choice if you want to pay less and don’t mind a smaller network and the extra step of getting a referral for a specialist from your primary care provider.

Learn the difference between HMO and PPO plans so you can make an informed decision about your healthcare.

On This Page

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  What’s the Difference Between an HMO and PPO Insurance Plan?

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  What Is an HMO Insurance Plan?

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  What Is a PPO Insurance Plan?

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  How Do I Choose Between an HMO or PPO?

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  FAQs

What’s the Difference Between an HMO and PPO Insurance Plan?

PPOs offer broader networks and don't need specialist referrals but are pricier than HMOs, which have smaller networks and require specialist referrals from primary care providers but are less expensive.

We have created a table that offers a quick comparison between HMOs and PPOs and answers other commonly asked questions.

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 typically require you to choose a primary care physician (PCP) who will coordinate your healthcare and refer you to specialists within the network when needed.

HMO plans generally offer lower out-of-pocket costs compared to PPOs but their provider networks are often smaller.

You will need to use providers within the network in order for the services to be covered unless it is an emergency. Also, with an HMO plan, you will be required to get prior authorization before receiving certain types of medical care, such as surgery or diagnostic tests.

Why Choose an HMO Plan Over a PPO Plan?

Choosing between an HMO plan and a PPO plan depends on your individual needs and budget. Here are some factors to consider when choosing an HMO plan over a PPO plan:

• Lower monthly premiums than PPO plans: What you pay for coverage will be less due to the restrictive nature of the provider network.
• Usually low to no deductible plans available: A lower or zero deductible means your coverage will kick in sooner or immediately.^[3] Keep in mind that your monthly premiums will likely increase as a result.

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 typically with higher costs if you go out of network. Keep in mind that a separate deductible will still apply for out-of-network services.

PPO plans generally offer more flexibility than HMO plans, as you can see any provider or specialist you choose without a referral from your PCP.

Additionally, PPO plans typically do not require you to choose a primary care physician. 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 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.

• Flexibility: As stated earlier, you have the freedom to visit any healthcare provider or specialist without a referral from a primary care physician.
• Larger network: PPO plans typically have larger provider networks than HMO plans, giving the option to visit a wider range of healthcare providers and hospitals.
• No referrals required: You won’t typically need to consult with and get referrals from a PCP in order to see a specialist.

How Do I Choose Between an HMO or PPO?

HMOs can be a suitable choice if you want predictable coverage and don’t mind having a primary care physician. After all, a PCP coordinates your care and, over time, understands your health better than you do. On the other hand, PPOs enable you to visit any healthcare provider you prefer without having to jump through hoops wondering if you’ll get approval from your PCP.

HMO vs. PPO: Costs

When evaluating your health insurance plan, it is important to take into account various expenses such as premiums, coinsurance, deductibles and copayments.

Keep in mind that costs are going to vary depending on if it is a bronze, gold or platinum plan as well as the insurance company and where you live.

HMO vs PPO: Pros and Cons

When choosing between an HMO or PPO, it is crucial to consider which factors are the most important to you. To weigh the advantages and disadvantages, here is a brief overview to assist you:

Staying in-network is more cost-effective for both HMO and PPO plans. If you have preferred doctors who are not within any HMO or PPO provider networks, a PPO may be a better choice since out-of-network coverage will be available (albeit at a higher cost).

Ultimately, the best plan for you depends on your budget and healthcare needs. If saving money is your priority, an HMO may be preferable. However, if you prioritize flexibility, a PPO may be a better fit.