How Do I Choose Between HMO and PPO Insurance?

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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.

Key Takeaways

  • HMOs generally have lower monthly premiums and out-of-pocket expenses than PPOs.
  • 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 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.





  • Lower monthly premiums[1]
  • Lower out-of-pocket expenses
  • Higher monthly premiums
  • Higher out-of-pocket expenses

Network size

Smaller than PPO

Larger than HMO

Is in-network coverage required?

Yes, except in the event of an emergency

No, but out-of-network care is still more expensive than in-network care

Do I need a primary care physician (PCP)?



Are referrals needed for specialists?



Will claims need to be filed?

No (care is typically received in-network)

Yes, when you seek coverage out-of-network[2]

Can I visit an out-of-network provider?

No, you will have zero coverage except for emergencies


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.
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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.





Typically lower than PPO

Typically higher than HMO

Out-of-Pocket Costs (Deductible, Coinsurance, Copay)

Typically lower than PPO

Typically higher coinsurance than HMO

Maximum Out-of-Pocket



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:



Generally cheaper monthly premiums

Generally higher monthly premiums

Need to see a PCP

PCP is not required[4]

Out-of-network care covered only when there’s an emergency[4]

Can see anyone in-network or out-of-network

Does not need to file a claim for reimbursement

Needs to file a claim for reimbursement for out-of-network services

Smaller network of providers

Larger network of providers

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.


What is the difference between HMO and EPO insurance?

HMO plans require you to choose a primary care physician and typically offer lower out-of-pocket costs. EPOs (exclusive provider organizations) are in many ways similar to HMOs with the exception that they are typically more expensive and have a wider network of coverage.

What is a drawback to HMO insurance?

One drawback of HMO insurance is that you are required to elect a primary care physician and obtain a referral to see a specialist, which can be a hassle and may delay your access to care. Additionally, HMO plans typically have smaller provider networks compared to PPO plans, which may require you to pay out of pocket to see an out-of-network provider.

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. The right choice will depend on your individual needs and preferences

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. Humana. “What Is an HMO?” Accessed March 11, 2023.
  2. “Preferred Provider Organization (PPO).” Accessed March 11, 2023.
  3. Kaiser Permanente. “Understand Your Costs.” Accessed March 11, 2023.
  4. Stride Health. “Plan Network Types Explained: HMOs, PPOs, EPOs and POSs.” Accessed March 11, 2023.

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