HMO Vs. PPO - Which Plan Is Better For Your Needs

By: Lewis Mark
Published: Thursday, January 31 2019
Last Updated: 5 years ago

If you’re in the market for a great Medicare Advantage plan, then you’re probably faced with the age-old dilemma. Which do you choose, an HMO or PPO healthcare plan? Well, that’s what we’re here to help you decide. We’re going to cover the difference between these two popular plan types, and finally settle the debate of HMO vs. PPO.

HMO Vs. PPO - What’s The Difference

The difference between an HMO and PPO plan really boils down to provider-networks, primary care doctors, and cost. An HMO plan allows you to access certain doctors and hospitals within a given network, who have negotiated lower rates for policyholders while meeting certain quality standards. The catch is, HMO plans only cover you if you see a doctor within the required network.

Other restrictions you may face while enrolled in an HMO include limitations on tests, doctor visits, and treatment that will be covered. You will also need to pick a primary care physician upon enrollment, though one may be chosen for you. Through an HMO, you will be required to see your primary care physician or doctor first, and they must give you a referral before you can see a specialist.

PPO plans are a bit more flexible when it comes to picking hospitals and doctors. These plans have a list of providers that they consider in-network, however, your coverage isn’t contained to your network. Although, there may be certain restrictions and additional costs for going out of network.

Another key difference with PPO plans is you don’t need to find a primary care physician. Meaning, you don’t need to go through the same referral process to see a specialist as you would with an HMO plan. While PPO plans do offer more flexibility, it comes with a higher sticker price. In other words, enrolling in a PPO plan usually costs you more than an HMO plan.

Where The Two Are Similar

There are similarities between the two plans, though they tend to stop at the most basic levels. Both plans require you to pay a premium each month to remain covered, and both come with out-of-pocket expenses you’ll be responsible for. HMOs and PPOs also provide you with similar benefits, including preventive care, maternity care, emergency coverage, and specialist treatment. They are both privately sold as Medicare Advantage plans, and that’s about the extent of where they overlap.

HMO Vs. PPO Examples

Understanding the difference between an HMO and PPO may seem a little more complicated on paper, but let’s try to make things a little simpler by looking at a couple of examples. We'll use Bridget, who is in her early 60's, and Larry, who is 72.

Bridget Has An HMO

Bridget is will be retiring soon but is already living on a budget. She enjoys the low premiums that she gets with her health maintenance organization plan. Bridget regularly visits her primary care physician, and she only needs to take her annually covered tests at this healthy point in her life. She doesn't mind having to see her primary care physician for a referral, because she trusts her doctor, and it makes life easier than her having to search for a specialist on her own.

When she does land an appointment at the specialist, her copay is affordable, and all information is kept on record and easily transferable between the two doctors in the network. Bridget is very lucky that her favorite doctor was listed in her network because if she couldn't see him, she would be very disappointed.

Larry Has A PPO

Larry tends to bounce around from doctor to doctor, saying he enjoys the flexibility. He doesn't visit as often as he should, but if he goes to a doctor that's not in-network, he pays the bill upfront, and the plan reimburses him a portion of the coverage anyway. Larry likes the thrill of completing his own research and trying out a doctor, and he's paying a higher premium to do it. He feels like when he needs a doctor, they are easy to find, and not usually booked up. Larry feels with his current plan, he can get an appointment much quicker.

Cost Comparison

If you’re looking to enroll in a Medicare Advantage plan strictly based on the cost alone, then you may want to go with an HMO. While HMO plans are stricter when it comes to who you’re allowed to see, by staying in a network of doctors who agreed to lower their rates, the savings your insurer receives will be passed along to you in the form of cheaper premiums.

PPO plans also have a provider network, but aren’t as strict with who you’re allowed to see. That translates into more members seeking out services with medical providers who haven’t negotiated rates with the insurer, resulting in higher price tags for services. The increased cost PPO plans incur, are passed along to you in the form of higher premiums.

HMO plans may be more cost effective when you’re staying in-network, but what about if you need to see someone out of your plan’s network? That’s where a PPO is a more affordable option. Typically, your HMO plan won’t cover medical providers out-of-network, but PPO plans will. They may not cover your bill completely, but you’ll be much better off out-of-network with a PPO plan than an HMO plan.

Find The Right Plan With FirstQuote Medicare

FirstQuote Medicare can help guide you in the right direction. Still unsure about whether you should go with an HMO or PPO plan? Well, we have experienced agents standing by ready to help you find the best fit for your specific needs.

Already know which plan you want to enroll in? That’s not a problem either. By entering your zip code, you can expedite the process, and compare Medicare quotes in your area today. With no obligation or cost, feel free to browse options for as long as you’d like.