Trinity Clancy & Claire Easton

HMO vs. PPO?

Medicare Advantage Plans come in two different forms: HMOs and PPOs. This article will discuss the difference between HMOs and PPOs

Generally speaking, an HMO might make sense if lower costs are most important and if you don’t mind using a PCP to manage your care. A PPO may be better if you already have a doctor or medical team that you want to keep but doesn’t belong to your plan network.

In terms of popularity, the Kaiser Family Foundation’s 2018 Employer Health Benefits Survey shows that in employer health insurance, PPOs dominate. 49% of covered workers had PPO plans in the survey, while HMOs covered 16%.

When it comes to your own health plan choice, it may sound like a cliche, but when choosing between an HMO or PPO plan, it is not necessarily about which is better, but which is best for you. If you have a choice between these two types of plans, you’ll need to consider the pros and cons of each type, and how they apply to your particular situation. 

HMOs Generally Win on Cost

If your financial situation dictates that cost is most important, you might seriously consider going with an HMO plan. Generally speaking, costs for HMO plans will be less. On Advantage Plans, copays and coinsurance for medical care will be lower, or may be absent entirely.

If you get your medical care near where you live, don’t mind referrals from your Primary Care Doctor (PCP) and can easily stay within your plan’s network, and HMO may be just the right fit for you. With HMOs, out-of-network coverage will usually be limited to emergencies; non-emergency services that are out-of-network for the plan are not usually covered at all.

HMO plans only pay for care that is provided by in-network doctors, hospitals and providers. HMO plans also frequently require a referral from yourPCP to see a specialist or to complete tests or receive other care.

PPOs Usually Win on Choice and Flexibility

If flexibility and choice are important to you, a PPO plan could be the better choice. Unlike most HMO health plans, you won’t likely need to select a primary care physician, and you won’t usually need a referral from that physician to see a specialist. A PPO network will likely be larger, giving you a greater selection of in-network doctors, specialists, and facilities to choose from. Additionally, PPOs will generally have some coverage for out-of-network providers, should you want or need to see one.

PPO plans sometimes have a national network, where you can see a provider in another state for an in-network copay. Emergency room visits are considered in-network on all plans.

PPO plans typically have higher cost sharing, copays and coinsurance. It’s important to know the costs before deciding on a plan to make sure you choose the plan that will work best for you.